Brazilian farmers have been hesitant to sell their 2016/17 corn and soyabeans over the past year, but that has not held the country back from already tallying record exports for both crops with a few months still left in the season. The soyabean volumes reflect genuine growth in global demand for the oilseed, as the United States has also enjoyed a bountiful export campaign at the same time.
Brazil and the United States are the two leading suppliers of both corn and soyabeans, and together they account for about 70 percent of the world's exportable product. And following this year's harvests, corn and soyabean supply in the South American country is 30 percent larger than one year earlier, when output was cut by drought.
Brazil's record soyabean harvest was nearly complete by the end of March. But at the same time, producer sales of the oilseed were at a seven-year low, stemming from much-decreased profitability compared with the previous year. In fact, Brazilian farmers had been very slow on 2016/17 sales relative to previous years for both crops since before the first seeds were sown one year ago.
This, along with competitive prices for the US products, drove more business north of the equator than had been anticipated in light of Brazil's monster corn and soyabean harvests. In Brazil, corn and soyabean exports are seasonal and immediately follow harvest. Corn is heavily shipped between August and January while soyabeans take the stage beginning in February. US soyabean shipments are strongest between October and January, while corn is generally a year-round operation.
BRAZIL VERSUS USA
Recent exported volumes of soyabeans out of both Brazil and the United States suggest there may be enough demand in the market for both rivals to flourish, at least for now. In the 2016/17 marketing year that began on February 1, Brazil needed only the first seven months to break its previous record for full-year exports. Five of the eight months so far in the season have featured new all-time monthly highs.
The United States has had simultaneous successes. Between February and July, US soyabean shippers amassed a new record volume for the period, some 6 percent larger than the previous record set in 2012. During the 2016/17 US soyabean marketing year that concluded on August 31, the country had broken its previous full-year volume record after just 10 months.
Both Brazil and the United States set new soyabean export records for the month of April, during which they shipped a combined 12.9 million tonnes (473 million bushels). And it is no surprise that leading buyer China tallied landslide record imports for the April-through-May period. However, competition in the corn market is certainly tighter and the data proves it.
Domestic supplies were tight in Brazil after the 2016 drought severely clipped the previous harvest of safrinha or second-crop corn, which is primarily devoted to exports. As such, the 2016/17 corn marketing year that began on March 1, 2017, got off to a very sluggish start. Slow beginnings for Brazil likely allowed the United States to set a new export record for the March-through-May period of 17.5 million tonnes, some 8 percent larger than the former high from 2013/14.
But Brazil's corn shipments in the last three months have all set new monthly records. The combined July-through-September volume of 13.5 million tonnes blows away the previous high of 7.6 million set in 2012. Not surprisingly, US corn shipments during the same time were not as impressive as in the previous months, and the volumes fell back down to levels observed in the summers of 2014 and 2015.
FINISHING OUT 2016/17
Brazil's agricultural statistics agency Conab predicts the country will ship 64 million tonnes of soyabeans in the 2016/17 marketing year that concludes at the end of January. The US Department of Agriculture's figure is slightly higher at 65 million. Taking the more aggressive USDA scenario, Brazil would need to ship roughly 1.19 million tonnes of soyabeans per month for the next four months to meet the goal. The country exported a record of 1.4 million tonnes per month for that period at the end of the 2010/11 marketing year, which concluded in January 2012.
Conab's estimate implies that the needed pace is about 935,000 tonnes per month. December and January are typically the quietest months of the year for Brazilian soyabean shipments. USDA and Conab deviate much more in the forecast for 2016/17 corn exports. The US agency expects Brazil to have shipped 36 million tonnes of the yellow grain by the end of February 2018. This implies that the average monthly volume needed over the next five months is 4.25 million tonnes, which would be the second-largest ever but well off the record pace for the period of 5.28 million per month set in the 2014/15 marketing year.
Conab has 2016/17 corn exports at 29 million tonnes, which would set the monthly pace needed from October through February at a much more modest 2.85 million tonnes. As of September 29, some 3.3 million tonnes of corn and 2.1 million tonnes of soya were in Brazil's port lineup for an October departure according to shipping agency Williams. Most of these shipments had scheduled sail dates in the beginning half of the month.