BEIJING/SINGAPORE (Reuters) — Brazil’s share of soybean exports to China, the world’s top buyer of the commodity, grew to the largest on record in 2017 and looks set to grow again this year, helped by competitive prices and the high protein content.
That’s another potential blow to rival exporter the United States as it grapples with tougher quality rules on its shipments to China from 2018, as well as with global markets flooded over the last few years by bumper supply.
China, which imports 60 percent of the soybeans traded worldwide, bought 50.93 million tonnes from Brazil in 2017, accounting for 53.3 percent of total purchases, according to customs data released Jan. 25.
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U.S. sales came in at 32.9 million tonnes, or 34.4 percent of China’s imports, the exporter’s lowest share since at least 2006.
“Soybean imports from Brazil to China are expected to keep growing in the new year…. Brazilian beans will have an advantage in prices and protein (content),” said Tian Hao, senior analyst with First Futures in the Chinese city of Tianjin.
Brazil took over from the United States in 2012 as the top supplier to China, with its exports often attractively priced as it relies on overseas markets for sales due to limited domestic demand and storage. Brazilian soybeans also boast higher protein levels than U.S. supplies, making them more attractive for animal feed producers.
A weaker real also helped lure buyers in 2017.
The United States is the world’s biggest soybean exporter after Brazil, with the two countries accounting for roughly 80 percent of global shipments, which are valued at around US$50 billion annually.
Brazil’s share of the export market is on track to keep growing in 2018 as it gears up for a crop of around 114 million tonnes, matching last year’s all-time high production.
Larger harvests mean Brazil’s marketing season, which begins in May, has started to extend into October-November rather than ending around September as is traditional. That has eaten into the period when U.S. supply has typically dominated markets.
“Soybean inventories everywhere are so large that there is nothing like U.S. marketing season or South American marketing season (anymore),” said a veteran soybean trader at one of China’s state-run trading companies.
“Brazil has started harvesting new-crop beans while it is still not done selling last year’s crop.”
And Brazil’s slice of the Chinese market will likely get another boost in 2018 as restrictions imposed by Beijing on U.S. shipments from Jan. 1 bite.
China introduced the stricter import standards, which have reduced the amount of foreign matter allowed in the most widely traded soybean variety to one percent from two percent previously, after raising concerns about weed seeds.
“They are penalizing U.S. beans,” said Roy Huckabay, an analyst with Linn & Associates.
