Brazil to produce record amount of soybean meal, oil amid higher crush margins

Brazil is on track to produce record volumes of soybean meal and oil in the 2021-22 marketing year (October-September), possibly surpassing such marks in the upcoming season amid persistently attractive crush margins for local processors.

In its latest World Agricultural Supply and Demand Estimates report, released July 12, the US Department of Agriculture pegged Brazil’s 2021-22 soybean meal and oil outputs at historical highs of 38.17 million mt and 9.48 million mt, respectively.

Overseas shipments of meal were also projected to reach an 18.50 million mt record, while oil exports were seen at 2.05 million mt, the highest volume since 2007-08 amid a lower-than-expected biodiesel mandate for 2022 — soybean oil is the main feedstock for the Brazilian biodiesel industry, so a cut in the mixture led to a surplus of vegetable oil to be eventually sent abroad.

This performance regarding soybean sub-products has been following a consistent local crush, estimated by the USDA at a 49.25 million mt record for 2021-22, or up 5.5% on the year, as margins for local processors in 2022 have been above those seen in 2021.

The Brazilian soybean crush margin July 13 was at $27.51/mt, 18% higher in comparison with same date in 2021, according to Platts data from S&P Global Commodity Insights. The year-to-date average for this margin was $66.81/mt, or 51.5% above the average calculated for the same period last year.

The highest level so far in 2022 — and for the entire Platts series — was assessed March 8 at $124.96/mt, following sharply higher soybean oil prices in the international market because of the consequences of the Russia-Ukraine conflict. No crush margin above $100/mt was seen in 2021, still as per S&P Global Commodity Insights data.

According to the USDA, Brazil is likely to increase its soybean meal and oil production to records in the 2022-23 marketing year, reaching 38.35 million mt and 9.53 million mt, respectively, as crushing was pegged to increase by 0.5% to 49.50 million mt — although a higher volume could be achieved.

“I expect the crush could reach 50 million mt in Brazil if the crop is around 150 million mt,” Peter Meyer, head of Grains and Oilseeds Analytics at S&P Global Commodity Insights, said. “That would be a record, and thus both oil and meal productions would be records as well.”

For now, the USDA still sees Brazil harvesting a record 149 million mt soybean crop in 2022-23, or 18.3% higher from the drought-affected 2021-22 season.

Brazil is the world’s third-largest producer of soybean meal and oil and the second-largest when it comes to exports of both commodities, behind Argentina.

Tags: shipments, output, feedstock, record volumes, crush margins, exports, soybean oil, Brazil, Vegetable Oil, soybean meal, biodiesel