(Agrimoney) – The soybean market faces a wave of selling pressure from Brazilian growers, and potential Argentine farmers too, the head of agribusiness giant Bunge said – although offering reassurance on Chinese import demand.
Brazilian growers, harvesting a soybean crop which the officials Conab crop bureau on Thursday pegged at a record 94.6m tonnes, have priced only about 25% of their output, below a typical 40% by now, Bunge chief executive Soren Schroder said.
The estimate is lower than the 33% figure estimated by AgRural at the start of February, up 2 points month on month.
In Mato Grosso, the top soybean producing state, growers have sold 50% of their crop, down 12 points year on year, according to the Imea research institute.
‘Creating more activity’
Mr Schroder added: “So there’s lots of pent-up farmers’ selling that should occur over the next really two months in Brazil.
Indeed, “we are beginning to see it,” he told investors.
“The weakness in the real over the last days and weeks is clearly creating more activity,” in raising the value, in Brazilian terms, of crops such as soybeans which are priced in dollars.
The real has lost some 6% against the dollar so far this year.
“So I’ll say origination activity is, at the moment, is fairly brisk. And we expect that will continue over the next weeks.”
Argentine prospects
In Argentine too, for which soybean production prospects are being upgraded, farmers look likely to accelerate sales.
Mr Schroder acknowledged a “bit of a question mark” over Argentine farmers’ soybean selling strategy, “for the reasons of the financial volatility in that market”.
The depreciation in the peso, and strong domestic inflation, have encouraged Argentine growers to hang on to crops as a dollar-denominated hedge.
“But our belief is that farmers will sell a fair amount of beans at harvest,” he said.
China outlook
However, on a more bullish note for prices, he eased concerns over a slowdown in China’s soybean imports, which some commentators have cautioned of following a liquidation in the breeding herd last year which some have estimated at 6m head.
“It is true the profitability in hogs particular has been challenged over the last year or so. But we still expect roughly a… 3m-4m tonne increase in soybean imports to China in this coming season.”
In China, the top soybean importing country, Bunge intelligence indicates that soymeal “is disappearing at roughly a 5% year-on-year increase.
“So is there is still growth in China in protein consumption, without a doubt, irrespective of the profitability and we believe that that will continue into the next year.”
The comments followed the release by Bunge of a surprise drop in quarterly profits, which sent its shares down 12%.
