With dry bulk rates witnessing “boom” times, it’s worth taking a look at one of the important markets, i.e. Brazil and its exports of soybean. In its latest weekly report, shipbroker Banchero Costa said that “two weeks ago, we discussed soybean exports from the United States during 2020 and early 2021. Let’s now have a look at the other leading exporter of soybeans: Brazil. Overall, soybean trade was extremely positive in calendar 2020, despite the global economic impact from COVID-19, and driven primarily by Chinese demand as the country was rebuilding it’s pig herd following the devastating African swine fever outbreak in previous years”.
According to the shipbroker’s report, “mainland China’s performance in calendar 2020 was quite stellar, with imports of 94.9 mln tonnes of soybeans, up +17.5% y-o-y. Mainland China accounts for 63% of global soybean trade. Whilst geopolitics pushed China to favour North American soybeans last year, Brazilstill remained king. During calendar 2020, Brazil exported 80.3 mln tonnes of soybeans, based on Refinitiv data, which was a +12.9% increase from the 71.2 mln tonnes in 2019, whilst still being marginally less than the 81.3 mln tonnes exported in 2018. Soybeans, like most agricultural products, are by nature a very seasonal trade. In 2020 however, due to both natural weather-related crop patterns, but also very much due to geopolitics, the seasonality was pushed to the extreme”.
Banchero Costa said that “in the first 3 months of 2020, Brazil exported 21.2 mln tonnes of soybeans, which represented an increase of +17.3% y-o-y on the same period of 2019. The second quarter of 2020 was truly exceptional, and saw shipments as high as 38.6 mln tonnes from Brazil, up +48.4% y-o-y. In the third quarter, exports softened as normal to 17.4 mln tonnes, which was still up +16.6% yo-y from the same quarter in 2019. The fourth quarter of 2020, however, was exceptionally bad. Shipments in the last quarter slowed to just 3.1 mln tonnes, which was a whole -74.3% y-o-y from the 12.1 mln tonnes shipped in the same period of 2019. The bottom was reached in December 2020, when exports essentially grounded to zero”. They remained at essentially zero also in January 2021. Loadings started to rebound in February 2021, with 5.4 mln tonnes shipped during that month. However, this was still the lowest volume for the month of February since at least 4 years.
The shipbroker added that “excessive rain in Brazil has slowed the harvest and exports in the country during this winter season. Following the signing of the trade agreement with the Trump administration, China has by and large complied in vastly increasing it’s imports of American soybeans, at the expense of Brazilian supplies. However, Brazil has had some success in diversifying its customer base away from it’s dependence on Mainland China. 69.7% of soybean shipments from Brazil in calendar 2020 were to Mainland China. This was down from a 74.7% share in 2019, and a 80.4% share in calendar 2018. Shipments from Brazil to China increased by just +5.4% y-o-y in 2020, to 56.0 mln tonnes, from 53.1 mln tonnes in calendar 2019. They were however significantly down from the 65.4 mln tonnes in 2018. Exports to other destinations really surged in calendar 2020. Shipments to the European Union increased by +68.9% y-o-y to 8.3 mln tonnes. The EU accounts for 10.3% of Brazil’ssoybean exports. Volumes to Turkey surged by +61.7% y-o-y to 2.1 mln tonnes. Turkey accounts for 2.6% of Brazil’s soybean exports. To Thailand there was a +40.6% y-oy increase to 2.4 mln tonnes. Volumes to Taiwan increased by +17.7% y-o-y to 1.2 mln tonnes. To Pakistan it was +56.3% y-o-y to 1.2 mln tonnes. To South Korea volumes increased by +78.2% y-o-y to 0.8 mln tonnes”, Banchero Costa concluded.