Brazilian farmer soybean sales sluggish in April amid corn clearout

14 May 2019 | Andy Allan

Brazilian farmers continued to sell corn ahead of soybeans last month on the hope that prices would spike in May amid a collapse in trade talks between the US and China, official data and sources told Agricensus this week.

Brazil soybean sales in the largest producing state of Mato Grosso were 71.8% of the expected harvest by the end of April, down on 79.7% at this point last year despite a much smaller harvest this year, according to the state’s institute of agricultural economics (IMEA).

Meanwhile, corn sales for the year have reached 62.3% of the harvest, up five percentage points on last year, as the country labours under a record corn crop that some estimate to be as much as 100 million mt.

“We have a huge crop. There is too much corn and farmers (have) preferred to sell it ahead of soybeans,” said one market source.

However, that may change given last week’s escalation in the trade war between the US and China, but only if soybean prices rise to meet farmer expectations – a dynamic that has yet to happen.

“The question now is how will China meet its (soybean) import needs? Without US and Canada supplying China, our premiums will skyrocket again,” the Brazil-based source said.

Premiums over futures for Brazilian beans have risen sharply over the past week – surging to 90 c/bu from 53 c/bu for June cargoes since the start of the month.

However, that rise has not even compensated for the fall in futures prices, with flat prices in reais terms remaining relatively low due to sluggish demand from China amid the ongoing outbreak of African swine fever and abundant global supply.

Current prices for cargoes out of Brazilian ports priced stood at BRL1,308/mt on Monday, according to Agricensus data, versus an average of BRL1,337/mt for March and BRL1,330/mt for Q1.

Nevertheless, the fall in soybean prices was outstripped by that in corn, with current corn cargoes in reais terms valued at BRL619/mt, compared with BRL660/mt last month and BRL700/mt in Q1 as prices have been dragged down by bumper supply.