Growth of the competition between the US and Brazil not only on the soybean market, but also corn one — Céleres




Brazil is one of the leading agricultural countries not only in the southern hemisphere, but also in the whole world. From one year to another, Brazilian farmers gradually increase the production volumes of key crops such as soybeans and corn, developing not only the domestic processing industry, but also strengthening the country's position on the global stage. At the same time, in the current season Brazilian exporters can face a number of challenge, in terms of the fiercer competition rates from the USA, as well as the Chinese factor.

The Founder and CEO of the Brazilian consulting agency Céleres, Anderson Galvão Gomes, reported to APK-Inform Agency about the features and prospects of the Brazilian market, key features of the world trade, as well as the current challenges and prospects.


— First of all, we would like to ask You about Your expectations of the second half of 2019/20 MY in terms of soybean trade, especially in light of recent events — signing of the US-China phase 1 trade deal, and the outburst of the coronavirus in China. How Brazil and Argentina react on these events?

Brazilian growers are poised to harvest an all-time record soybean production and consequently, very dependent on the exports, mostly to China. Our current view still pointing the total soy exports at 70 mln tonnes, down from 75 mln tonnes in 2019.

Yet in January, Brazilian soybean exports faced a sharp 27% drop compared to previous year in face of expected competition with US exports, but also affected by the African Swine Fever (ASF) in China.


— Following the first question: can the export destinations of the Brazilian soybeans change? What are the most possible destinations, if any?

Answering with 80% of total soybean exports, it is quite difficult to Brazil to replace the relevance of China in the soy exports. In the near term, Brazilian soybean exports are working to increase the relevance of other Asian importers like Vietnam, Indonesia and Malaysia while preserving the footprint in Western Europe.


— If we look at the problem of the coronavirus in China, what can you say about the phytosanitary control of the soybean and corn batches? Has the protocol been changed in any way? Or, maybe there were some changes to the final delivery points (seaports) in China?

Right now, there wasn’t any major or relevant chance in the export protocols from grains cargo leaving Brazil toward China or any other buyers. The side effect is much more related with the functionality of trading if taken in account the quarantine of travelers and crew members of ships travelling in and from China.


— How in general do you estimate the competition between the US and Brazil in terms of soybean trade? What is the role of the Brazilian economy development here?

This competition has growing year by year and since Brazil became to top soybean export few years ago, accommodating those two major players in the market is crucial, while the Chinese market face a slowdown, first due to the ASF and now, with the outbreak of сoronavirus.


— If we speak about the grain market, Argentina is the main trade partner of Brazil. However, taking into account the increase of the export taxes for wheat in Argentina and the Brazil implementing the zero tax import quota for wheat (750 thsd tonnes per year), what are the prospects of Argentina’s grain export to Brazil?

For several issues other than taxes, Brazilian wheat importers prefer the product imported from Argentina. However, Russian and Canadian wheat became more competitive at cost of the expected wheat imports from Argentina.


— How do You estimate the price development and the grains and oilseeds production forecasts in Argentina next season considering the export taxes rise?

For a market perspective, the tax system deployed in Argentina doesn’t affect the international market — as observed when Argentina first put those tax systems in the 2000’s — but depress the final income of grain producers. Mainly for corn and soybeans, any eventual reduction at the Argentinean exports will be easily fulfilled by the Brazilian ones, keeping the international well balanced.

The major challenge for Argentineans growers will be financing their crops under the deterioration condition of Argentinean economy and its credit availability. Those issues might result in lower technological levels for Argentinean fields with consequently potential lower yields.


— For the last 10 years Brazil has been gradually increasing the areas under soybeans and consequently the production of the oilseed. Will this trend preserve in a mid- and long-term perspective?

With its competitiveness boosted by a weaker local currency and improved logistics, Brazilian growers are poised to keep the expansion rate of their soybean plantings at 1 mln ha per year in the medium term, the competition between US and Brazil will be even greater, not only in soybean but also in corn.

The birthing of corn-to-ethanol business in Brazil is providing an additional boost to produce corn, in the double-crop system, and will stimulate growers for further expansion of soybean plantings as soybean acreage is required to plant corn in the sequence.


Interviewed by Polina Kalaida, APK-Inform Agency


You can learn more detailed information about development of the export trading with grains and oilseeds in South America in 2020 from the report of the CEO of the Brazilian consulting agency Céleres, Anderson Galvão Gomes, within frames of the international conference Middle East Grains&Oils Congress, to be held in Cairo, Egypt, on March 3, 2020.

You can become a participant of the international conference Middle East Grains&Oils Congress, and get answers to many questions!