S.American overharvest threatens U.S. exporters in their crucial crop period
Brazil is expected to win a larger share of China's soybean imports in coming months, hitting U.S. exporters during the peak marketing season for their most valuable farm product as the world grapples with a fifth consecutive bumper crop.
China is expected to buy about 5 million tons of soybeans from Brazil for the fourth quarter of 2017, two senior trade sources said, double the 2.49 million tons shipped over the same period last year.
For U.S. soybean exporters, the October-December period is crucial, accounting for an average of 53 percent of calendar year shipments for the past five years, according to U.S. Census Bureau trade data.
China, the top importer of U.S. agricultural goods, ships in more than 60 percent of the oilseed traded worldwide. Brazil normally has little left for exports by around October, but a record 2016-17 crop of 114.1 million tons means it still has unsold stocks.
"As far as prices are concerned, Brazilian beans are competitive and they have stocks to sell," said one Singapore-based senior executive from an international trading company, which has soybean processing facilities in China.
Soybeans are the U.S.' most valuable farm product, with sales of $22.8 billion in 2016.
World soybean production stood at an all-time high of 351.254 million tons in the 2016-17 crop year, with output hitting record highs in three out of the prior four years.
Production is projected to reach the second highest on record in the 2017-18 crop year, with the U.S. on track for a record crop of 120.582 million tons just as the weather in Brazil improves following concerns over dryness.
"We expect Brazilian weather to remain crop-friendly over the next few months," said one agriculture analyst at an international bank focused on commodities. "Brazil's next-year bean crop is expected to hit the market by February-March. It gives the U.S. hardly any time to boost sales."
Brazilian and U.S. soybean prices are quoted at similar levels, at around $420-$425 a ton, including cost and freight, for November shipment to China.
But traders and analysts said Brazilian quality is usually better in terms of meal and oil extracted after processing.
China's official data shows the last three months of 2017 will be above average for Brazilian soybean arrivals. Between 2010 and 2016, bean arrivals in China from Brazil over the final three months of the year averaged 3.531 million tons.
