SAO PAULO, BRAZIL — The trade war between the United States and China will benefit the Brazilian soybean industry in 2018-19, according to a Oct. 3 Global Agricultural Information Network report from the U.S. Department of Agriculture (USDA).
The USDA said it expects Brazil to export 75.5 million tonnes in the current marketing year, up slightly over the previous year.
“Assuming China continues to apply import duties on U.S. soybeans, demand for Brazilian soybeans will remain elevated,” the USDA said.
It noted that Brazil’s 2018-19 growing season was off to a good start, with producers taking advantage of favorable weather in the south and central-west regions of the country. The USDA forecasts soybean planted area to rise by 3% to 36 million hectares and production to reach a record 123 million tonnes.
“The increase in planted area for the 2018-19 crop is due, in large part, to producers’ continued optimism about the valuation of Brazilian soybeans,” the USDA said. “Since the beginning of the calendar year, local soybean prices rose markedly on the back of robust demand from China, as well as the weak Real (Brazil’s currency).”
Even with the anticipated increased plantings and production, the USDA said stocks will be drawn down to around 1% of domestic supply. But the USDA said its sources in Brazil did not express any concern regarding the low stock to domestic supply ratio.
“The assumption in Brazil is that should there ever be a shortfall for domestic consumption, Brazil could always bring in additional supply from neighboring producers,” the USDA said. “Instead, traders and producers alike are clearing out every last bin in order to take advantage of the upside in prices stemming from international trade tensions.”
The USDA said despite recent press reports that Brazil may import a large volume of soybeans from the United States, it does not anticipate that occurring because the infrastructure in Brazilian ports is not adept for the import of grains.