Soybean prices on October 20 increased by Rs 39 and settled at Rs 4,344 per quintal in the futures market. Soybean for November futures boosted Rs 39 on the national Commodity and Derivatives Exchange, which equals 0.91% and touched Rs 4,334 per quintal with an open interest of 88,880 lots.
Significantly, there are only four countries that matter in the world of soybean exporters. Those countries are the United States, Argentina, Brazil and Paraguay. Brazil exports approximately 54% of all soybean exporters from those four countries. However, it has to be mentioned that those countries have round out of beans to sell.
As we already mentioned, Brazil is the world’s leading producer and exporter of soybean, however increasing domestic usage and record sales to China have drained supplies. According to the government, the suspension of import duties in an attempt to encourage imports and suppress rampant domestic food inflation.
It may soon be big news to everyone on the planet if the price of soybeans outside of Brazil mimics the price of domestic Brazilian soybeans to what the USDA claims now record high price levels.
Remarkably, the United States is the world’s second-largest soybean exporting county, and the only major soybean exported outside of the Mercosur pact. Therefore, the removal of import duties should permit imports from the U.S. However, it has to be mentioned that Brazil can’t import most genetically modified soybeans, which suggests it can’t easily turn to the U.S. to fulfil its soybean importing needs.
Besides that, all this is creating more of a soybean deficit in Brazil than might be expected given that global soybean ending stocks are over their ten-year average, and global production of soybeans is predicted to be record high this crop year.
China must turn to the United States, Argentina, and Paraguay
However, even with high levels of production, global usage is surpassing supply; global soybean inventories are anticipated to fall in the 2020/21 growing season, marking a third consecutive year of failing global soybean inventories.
China has taken a leading role in the soybean problem, and what it does next will likely discover the global prices of soybeans for the future. An important part of Brazil’s soybean exports has been committed to China. Now that Brazil has oversold its capacity, China must turn to the United States, Argentina, and Paraguay for its remaining importing needs. Now, in a bizarre agricultural irony, China will be competing with its leading supplier of soybeans for soybeans, which is an unexpected turn of events that will instantly benefit U.S. farmers.
The USDA projects China will need to import a record 100 million metric tons of soybeans this year. China is currently the best with its soybean purchases from the United States for the 2020/21 crop year. It’s little wonder that soybean prices in the U.S have recovered above 20% since August.