Brazil set to ship 79k mt of soybeans to the US as prices get competitive

20 Apr 2023 | Eduardo Tinti

Brazil is set to export at least 79,000 mt of soybeans to the US between April 25 and May 1, according to line-up data, with US processors attracted by increasingly competitive prices in the South American country. 

Two vessels chartered by Bunge and The Andersons are scheduled to sail from the Itacoatiara and Santarem river ports in northern Brazil – part of the region known as Northern Arc - carrying 46,150 mt and 33,000 mt of beans, according to line-up data from shipping company Cargonave.

If confirmed, this will be the first relevant batch of soybeans flowing between the two countries since January but there is a general understanding in the market that Brazil may ship significant volumes to the US this year.

“I think [large Brazilian soybean exports to the US] is a pretty safe assumption,” Advance Tranding’s analyst Larry Shonkwiler told Agricensus.

Futures International’s Terry Reilly agrees that exports of Brazilian beans to the US might be on the high side this year.

“[US imports] started earlier than normal," Reilly said, adding: "We generally see this done during the summer when the area runs out of soybeans."

Although the US is the world’s second-largest soybean producer it occasionally buys Brazilian beans with a record just above one million mt imported during the 2014 calendar year.

This year, the bumper soybean crop which Brazilian farmers are lifting from their fields that is expected to overpass 150 million mt, coupled with lukewarm demand in China, has pressured Brazilian premiums deep into negative territory, bolstering the country’s price competitiveness.

Agricensus understands that the volumes about to be shipped from northern Brazil are heading to the US East Coast.

Market sources have said that one large processor in the region has already communicated to clients that there might be some difference in the aspect of the soymeal it produces, which could indicate that Brazilian soybeans will be crushed instead of US beans.

There is a wide price spread between beans from Brazil’s Northern Arc and those sourced domestically in the US and shipped to the East Coast.

“It is very expensive to transport beans from the Midwest to those locations along the southeast Coast,” Reilly said.

Nearby basis premiums for US soybeans on the East Coast were heard hovering around 90 c/bu while premiums in Brazil are trading at large discounts.

The Brazilian FOB basis for May loading at the southern port of Paranagua was assessed at a $1.90/bu discount to May futures on April 19 and sources told Agricensus that premiums for the same loading month in the Northern Arc should not be too different.

Even when freight costs are considered, Brazilian soybeans are much more competitive on the US East Coast than beans produced domestically – which could prompt US processors to procure more beans from Brazil through the coming weeks and months.