Brazil’s soybean exports in March approached a record 12 million tons, eclipsed only by port loadings that came in at 13.4 million tons. Roughly three-quarters of March exports were destined for China. Discounting in Paranagua relative to the U.S. gulf along with flush supplies from the recent harvest are helping to drive sales.
Sales and exports are also being driven by record Brazilian prices in reals as producers hope to take advantage of the near free-fall in the Brazilian real relative to the dollar. Since January 1, the real has depreciated by one-third with more than half of the fall occuring in March.
Much of this decline is due to the current global COVID-19 pandemic and resultant flight to U.S. dollars. Consequently, U.S. Gulf soybean prices have sagged nearly 5 percent from the first of the year, while Brazil’s local prices have risen 40 percent and stand near 1,870 reals/mt at the end of March.
With Brazil’s sales to China surging, U.S. sales to China remain sparse. Private buyers in China have only been able to access U.S. soybeans and avoid the tariffs since early March. While Brazilian sellers continue to price agressively given the record local prices, few purchases of U.S. soybeans by China are anticipated in the coming weeks.
With the global COVID-19 pandemic expected to continue for some time, the factors driving the U.S. dollar higher are unlikely to abate in the near term. Only when supplies in Brazil dwindle later in 2020 will there be opportunity of increased U.S. sales to China.