There are fresh signs the world’s largest ever soybean crop is getting even bigger, driving down global prices.
Brazil has seen nearly ideal weather for growing the oilseed, with abundant rains during planting season followed by plenty of sunshine in key regions such as Mato Grosso. As the harvest approaches, local prices are sliding, pointing to expectations of a bumper haul.
Private consulting companies are now raising the country’s output to 145 million tonnes, a world record.
Photo: Reuters
The gigantic harvest could help to alleviate some of the inflation that has global food prices at the highest in years.
“Of course the weather in December will be key, but I see a good crop coming out of Brazil,” Marcelo Lacerda, head sales trader for HedgePoint Global Markets in Brazil.
Supplies are still leftover from the previous season, which is weighing on the market and helping to make Brazil’s products cheaper than its main competitor, the US.
Prices are so low that farmers are withholding sales, hoping that better deals will come up in January. That has driven down overseas shipments.
A standard 60kg bag of soybeans plunged about 10 percent over the past two weeks.
There could still be rallies as there is drought in the southern state of Rio Grande do Sul and in Argentina. La Nina weather patterns in play are a wild card.
Any such shifts could affect yields, Lacerda said.
Buyers of soybeans including local industries such as chicken farms are also at the sidelines. They are waiting for the harvest to start, when supplies will really mount and drive down prices even lower.
US TRADE
Meanwhile, US soybean farmers who were hurt three years ago by then-US president Donald Trump’s trade dispute with China, the world’s biggest buyer, are finally reaping the benefits.
Overseas shipments of soybeans and soy-based products during the 2020-1021 season reached an all-time high of 74.76 million tonnes, an industry analysis of US Census Bureau data showed.
US soy exporters were forced to find new customers during the trade dispute, and now some of those countries including Egypt, Mexico and Pakistan are boosting purchases.
In addition to whole soybeans, they have bought more soybean meal and oil, which are used for animal feed and cooking, respectively.
Meanwhile, shipments to China, which typically imports roughly two-thirds of global exports, also recovered.
The diversified destinations should benefit farmers in the event of other trade disruptions. Sales to Egypt, for example, more than doubled from before the trade dispute.
“An opportunity came about when that happened,” Monte Peterson, chairman of the US Soybean Export Council and a grower from North Dakota, said of the trade dispute. “It allowed other countries to step in and take a look at US soy without the overwhelming competition of China.”
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‧Silver for March delivery rose US$0.17 to US$22.48 an ounce, while March copper fell US$0.03 to US$4.27 a pound.
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