After a strong start to the Brazilian soybean season, exports at 43 MMT for the first 5 months are underperforming last year’s record output. Obviously a much lower harvest figure (now standing at 126 MMT according to the USDA) is principally responsible though clearly Chinese demand is not as strong this year as lockdowns have clearly impacted meat consumption, leading to sharply falling pork prices and thus reducing farmers ability to purchase high quality international soybeans at this

years elevated prices.

Indeed, soybean prices in Brazil hit a record 694/ton in April but have generally remained high all year, currently averaging $638/ton for the year to date. This is over $200 (+46%) higher than the 2011-20 price average. By contrast China’s crushing mills have been hit at times by negative crush margins. All these factors have led to Chinese imports declining by 4 MMT (-12% y-o-y) to 28.7 MMT. As China typically imports around 70% of Brazil’s exports (2022: 67%), perhaps it is fortuitous that production

has fallen thus maintaining high FOB prices for other buyers. For the crop year of 2022/23, the outlook is at present far more positive with most forecasters predicting production of soybeans bouncing back to close to 150 MMT.

Despite the ever-present weather-related risks that threaten this strong forecast, the most apparent issue for production yields could be the lack of available fertilizer, and the cost of energy. 85% of Brazil’s fertilizers are sourced from abroad and clearly China’s export ban will limit supply from the east though volumes of fertilizer imported from Brazil’s other main supplier, Russia,

appear to be largely unaffected by conflict in the Black Sea.