A cut in demand from China is pushing down soybean prices in Brazil

Soybean prices in Brazil fell sharply at the beginning of January amid increased new crop supplies and reduced export demand, particularly from China.

China is reducing its soybean purchases in anticipation of further price declines in South America, amid rising soybean inventories and lower pork prices.

According to CNGOIC (China National Grain and Oil Information Center), soybean stocks in China increased by 8% for the week and amounted to 7 million tons as of January 12, which was 33% higher than in December and 65% higher than last year. . Stocks of soybean meal amounted to 980 thousand tons (-1% for the week, +11% for the month, +100% for the year), and soybean oil - 890 thousand tons (-2%, +5%, +25%).

USDA experts predict that in FY 2023/24, Brazil will harvest 157 million tons of soybeans, Argentina - 50 million tons, and Paraguay - 10.3 million tons, that is, together - more than 220.2 million tons, which will exceed 195 million tons by 13% , collected by these countries last year.

From Jan. 2 to Jan. 18, prices for Brazilian soybeans delivered to the port of Paranaguá fell 17% from 147 to 122 reais per bag, or from $496.95 to $412.44/t, according to Agricensus data. In the largest producer state, Mato Grosso, the spot price in Rondonópolis fell from 126 to 108 reais per bag, or from $425.96 to $365.11/t. Prices continue to fall, despite a reduction in the forecast for the harvest in this state to 39-43 million tons compared to last year's 45.3 million tons.

Brazil's farmers are holding back soybean sales as they wait for harvest to finish and prices to rise.

At the same time, soybean growing conditions continue to improve in Argentina. According to the BAGE exchange, 97% of the area is sown with soybeans, and the number of crops in good or excellent condition increased by 4% to 55% during the week. Local agencies estimate the soybean harvest at 55-56 million tons, which is significantly higher than the USDA forecast.

March soybean futures on the Chicago Stock Exchange fell to a 2-year low of $445.8/t (-8% for the month, 9.7% for the year).