The difference between US and Brazilian soybean prices is narrowing

In January-July of this year, compared to the same period in 2022, Brazil increased soybean exports by 19.7% to 72.47 million tons, while the share of deliveries to China increased by 69.5% to a record 50.4 million tons, - the Ministry of Foreign Trade of the country reports.

Analysts explain the significant increase in exports due to the competitive prices of Brazilian soybeans, which were sold $20-60/ton cheaper than the main competitor, American soybeans, in the March-July period. Chinese processors prefer high-protein Brazilian soybeans to U.S. beans and have taken advantage of deep discounts to boost imports.

In addition, 2023 has been a good year for Brazilian soybean farmers. Thanks to the record harvest of 2022/23 MR of 156 million tons, prices for Brazilian soybeans on the world market were very competitive, which allowed to increase exports.

Experts from the Brazilian agency Conab estimate soybean exports from the country in 2022/23 MR to a record 96 million tons, which will exceed the previous season's figure by 25%.

With US soybean prices becoming more competitive, China has stepped up purchases of US soybeans in recent weeks. According to Platts, part of S&P Global Commodity Insights, the spread between U.S. and Brazilian soybean prices is narrowing as the U.S. soybean harvest season approaches (which begins in September).

Platts estimated September SOYEX FOB Santos delivery at $537.68/t and SOYEX FOB New Orleans delivery at $537.19/t Aug 7.

Usually, soybean exports from the US increase sharply between October and January, while Brazilian soybeans are actively sold until the end of the year.