SunSirs: Brazil's Soybean Exports Surge Negatively Impacts the Market

SECEX released data showing that the pace of Brazilian soybean exports in December was significantly higher than the same period last year. From December 1st to 31st, Brazil's soybean exports were 3.383 million tons, compared to 2.006 million tons in December last year.

As the world's second largest exporter, Brazil's soybean exports surged 68.7% year-on-year in December (3.383 million tons vs 2.006 million tons), indicating a significant increase in global supply. This will directly lead to a loose supply-demand pattern in the spot market, suppressing soybean spot prices. Considering the current harvest pressure in South America, it is expected that spot prices will come under pressure and decline in the next 1-2 months.

The increase in soybean supply will increase the operating rate of crushing plants, and soybean meal, as the main by-product, is expected to increase in spot supply synchronously. Although the closing price of the main soybean meal futures contract 2605 at 2,782 RMB/ton (January 8th data) has slightly increased, the medium-term fundamentals have turned loose, and spot prices are facing downward pressure. Attention should be paid to the buffering effect of seasonal changes in feed demand on the decline.

The surge in soybean exports is also negative for soybean oil spot, as the increase in crushing capacity will increase soybean oil output. The closing price of the main soybean oil futures contract 2605 at 7,944 RMB/ton (January 8th data) is showing an upward trend, but the increase in supply may weaken the support of spot prices. Considering demand side factors such as biodiesel policies, the short-term decline may be relatively mild.

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