Brazil can change the structure of trade flows of grains and oilseeds – IGC director

Brazil has become an “important operator” in the world supply of corn and soybeans, and by expanding its export window, this South American country “could change the pattern of trade flows,” said Arnaud Petit, director of the International Grains Council.

“Until now, Brazil only exported in March, while the US exported mainly between September and November. But now Brazil can export longer during the marketing year. That’s something new,” Petit told S&P Global Commodity Insights at the IGC Grains Conference on June 13.

Brazil is the world’s largest producer and exporter of soybeans, according to the U.S. Department of Agriculture. Current production in MY 2023-2024 is estimated at 153 million tons, down 5.5% from last year.

Similarly, Brazilian oilseed exports in MY 2023-2024 are estimated at 102 million tons, up 6.8% from last year.

The USDA forecasts Brazil’s corn production for the current crop season at 122 million tons, down 11% from the previous season’s record crop, which helped the country overtake the US as the world’s largest corn producer.

Asked whether Brazil could continue to be an important driver of the global grain outlook, Petit said Brazil’s position could change next year.

The U.S. Department of Agriculture forecasts Brazil’s corn production for the current crop season at 122 million tons, down 11% from the previous season’s record harvest that helped the country overtake the U.S. as the world’s largest corn producer.

Asked whether Brazil could continue to be an important driver of the global grain outlook, Petit said Brazil’s position could change next year.

“So far, we have seen Brazil exporting a lot of commodities such as corn and soybeans, as well as being an important biofuels operator. But the situation could change a bit,” Petit said.

Growing domestic demand in Brazil will put pressure on its exports, Petit said.

Brazilian corn is expected to experience growing domestic demand, and the use of corn for ethanol is expected to rise to 17 million tons next season, according to the source.

While China remains Brazil’s main export destination, the surplus supply to that South American country will require more diversification, Petit said.

“Brazil has to convince China to think about soybean meal…,” Petit said.

“Brazil doesn’t have enough livestock, so the trade structure has to change [from corn and soybeans to by-products],” he added.

Brazil exported a total of 53.1 million tons of corn between May 2023 and May 2024, of which about 16.8 million tons, or 31.6%, went to China alone, according to S&P Global Commodities at Sea, S&P Global said.

Brazilian soybean exports totaled 95.5 million tons in the same period, with China accounting for 72.6 million tons, or 76% of total exports, according to CAS data.

Brazil is heavily dependent on China for exports. Diversifying supply by adding corn and soybean by-products could provide a boost to the country’s trade flow when the domestic market is limited.

Competition from rivals

“Brazil will compete with strong operators. In terms of soybean meal, Argentina is a strong operator, very competitive. There will be other rivals,” Petit said.

Argentina is the world’s largest exporter of soybean meal, with an estimated 24.4 million tons in MY 2023-2024, compared to Brazil’s 21.1 million tons.

Petit said that in addition to corn and soybeans, Brazil must also find new opportunities in wheat production.

USDA estimates Brazil’s wheat production in MY 2023-2024 at 8.1 million tons, while exports are forecast at 2.8 million tons.

In MY 2024-25, USDA forecasts a 17.28% increase in Brazil’s wheat production and a 7.1% increase in exports.

Asia is the top destination for Brazilian wheat exports, with net Brazilian wheat exports of 1.2 million tons between May 2023 and May 2024, 1.1 million tons to Vietnam, 1.1 million tons to the Philippines, and 264,084 tons to Thailand, according to CAS.

Platts, part of Commodity Insights, assessed corn FOB Santos FOB August loading at $205.30/mt on June 13, up $1.87/mt from the previous assessment, while the SOYBEX FOB Santos soybean contract for July loading was assessed at $453.62/mt on June 13, down 28. cents/day.

Tags: export, Brazil, soybean, wheat, USA, China, corn