Sep 29, 2009
Record Soybean Exports Leaves Brazil Crushers Short Of Soybeans
Author: Michael Cordonnier/Soybean & Corn Advisor, Inc.
Some soybean processors in Brazil are anticipating an early shutdown for their annual maintenance due to a lack of available soybeans. Normally, the annual maintenance shutdown occurs at the end of the year, but some processors have opted to do it early because they are out of soybeans. The reasons for the lack of soybeans include a smaller Brazilian crop in 2008-09, a record shipment of soybeans to China, and drought reduced crops in both Argentina and Paraguay.
Brazil front-loaded soybean shipments to China while at the same time Brazilian farmers were harvesting a smaller than anticipated 2008-09 soybean crop. Between January and August of 2009, Brazil exported more than 25 million tons of soybeans to China compared to 20 million tons during the same period in 2008. At the same time, Brazilian farmers harvested a 57.0 million ton crop in 2008-09, which was at least three million tons less than what had been anticipated at the start of the growing season. In other words, the rate of exports was too fast given the total size of the crop.
Complicating the situation this year is the fact that both Argentina and Paraguay also harvested much smaller crops than what had been anticipated at the start of the growing season. Brazil normally imports a few soybeans either from Argentina or Paraguay to carry then over until the new crop becomes available, but that is not going to be a possibility this year because both countries are essentially out of soybeans. There is talk in Brazil that processors might import soybeans from the U.S., but I don't think that will happen. Even if it would be economical to import soybeans from the U.S., Brazilian processors do not want to risk the wrath of the Europeans by importing soybeans in vessels that still might be contaminated with GMO corn dust. Even if the GMO corn dust issue could be resolved quickly, I think the processors will just take an extended down time and wait for new crop supplies to become available in early January.