Brazil's soy exports hit records in 2013

Brazilian soy market registered an excellent liquidity in this year despite the record production in 2013, favoured by the significant demand for the grain, mainly international- Brazilian soy exports hit records in 2013.

This is according to Cepea - the research centre linked to Sao Paulo University.

The soy selling was more attractive than by-product''s; therefore, domestic processing activities reduced sharply, registering the lowest levels since 2006. This aspect indicates that crushing profits dropped in 2013, despite higher soymeal prices. As for soyoil, quotes decreased, which also pressed down the revenue of by-products sales.

The soy production in the 2012-13 crop, harvested in 2013, was estimated by Conab (National Company for Food Supply) at 81.5 million tonnes, a record. Conab also indicated that exports might total 43 million tonnes and domestic processing activities, 38.5 million tonnes in 2013. Abiove (Brazilian Association of Vegetable Oil Industries), from January to October 2013, processing activities totalled only 24.7 million tonnes, the smallest since 2006 for the same period. Therefore, it will not be possible to reach Conab numbers, but Abiove still estimates domestic processing activities at 35.4 million tonnes in 2013.

In the first quarter of 2013, specifically, the record soy production pressed down quotes for soy and by-products in the period. In the following months, grain exports were boosted and domestic processing activities, consequently, dropped. The smaller processing, in turn, resulted in low supply of soymeal and oil. In this scenario, soymeal quotes upped significantly in the second semester of 2013, being also affected by higher international values. Therefore, in the average of regions surveyed by Cepea, while from September 2012 to April 2013 soymeal downed 33% and 36% for quotes paid to producers and of prices of trades between assembly and processing companies, respectively, from April 2013 to December 2013, values rose 32% and 38%, respectively.

Despite price rises of soymeal, the industry, affected by the significant demand from China, still preferred to export soy instead of processing it in Brazil. It is worth noting, however, that high soy price levels were also underpinned by high quotes of soymeal. In regard of the soyoil, the situation was the opposite and values moved down in most part of the year.

In July, unfavourable weather conditions for crops in the US (hot and dry weather) pushed up quotes at Chicago Mercantile Exchange/Chicago Board of Trades (CME/CBOT). In Brazil, trades were closed only when there was an immediate need of making cash flow, when it was necessary to open room in warehouses to receive corn that was being harvested in the second crop, and/or when there were opportunities to exchange soy for inputs.

Still affected by the firm demand, soy quotes continued to soar in August, mainly for soymeal. In September, the free-host period finished in main Brazilian soy producing regions and, in the second fortnight of the month, growers stepped up the planting in Paraná and Mato Grosso – first states to start activities on the field.

Between October and November, the development of the 2013-14 season continues satisfactory in Brazil. However, many producers, since the beginning of field activities, were concerned with the Helicoverpa armigera caterpillar. In Bahia, Mato Grosso, Goiás and part of Minas Gerais States, the Brazilian government allowed imports of chemicals for crop protection that are still not permitted in Brazil and other actions to control the plague.

Brazilian soy shipments totalled 42.8 million tonnes from January to November, the highest in history for the period, according to Secex (Foreign Trade Secretariat).

As for soymeal, only 12.4 million tonnes were exported from January to November 2013, the smallest volume since 2009. Considering soyoil, the total was 1.15 million tonnes, the lowest amount since 2000.

Source: CEPEA/ESALQ