According to Filipe Gouveia, Shipping Analyst at Bimco, heavy rain has kept Brazil’s soybean export volumes low in the first two months of 2023, but the country expects a record soybean harvest which will bring higher exports in a shorter time span.
Heavy rain slows exports of grains and oilseeds in Brazil both by delaying harvest operations and by affecting roads in some agricultural regions, roads which can become impassable to large trucks due to mud or are simply washed away.
Brazil’s CONAB pegs the 2023 soybean harvest at 152.9m tonnes, 21.8% up on 2022. As of March 6 2023, 44% of the planted area had been harvested, down from 53% at the same point last year.
Harvest volumes for commodity crops are affected by a range of factors, most notably the projected profitability of a given crop at the time of planting and weather conditions at key points between planting and harvest. Recent heavy rains have yet to impact crop quality, said Bimco.
The 2022 harvest was hit by drought, leading to lower production and exports.
“As the world’s largest soybean exporter, Brazil’s strong harvest will aid market conditions for grain shipping in 2023. A recovery in export volumes will aid panamax rates in the Atlantic basin as they transport over 85% of Brazilian soybeans and grains account for around half of panamax cargo loadings in the Atlantic,” said Gouveia.
Brazil is set to be the world’s largest exporter of soybeans in 2023 with 55% of world exports, followed by the US with 32%. On the demand side, China leads demand accounting for 59% of world imports.
Soybean demand is largely driven by the animal feed and China’s demand in particular is tied to the strength of its pork industry. Higher availability of soybeans is expected to bring lower prices and more sales of the commodity.
China’s imports rose 16% y/y in the first two months of 2023, said Bimco. Last year, China’s soybean imports fell by 6% as high soybean prices squeezed margins at soybean crushers.
“Driven by higher production and demand, Brazilian soybean exports are estimated to jump 19% in 2023 and expected to be the key driver of global grains exports. Wheat and maize supplies are estimated to remain strained, not least due to lower Ukrainian volumes,” said Gouveia.
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