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Brazilian Soybeans Exports – Market and Quality Insights

Brazil is a global leader in soybean exports and has built a robust value chain for oilseeds. Cotecna Brazil shares its insights on the origin of the Brazilian "soybean miracle" and the market's current trends.

To get a greater understanding of this issue, we interviewed Luiz Cavalcante, Grains Quality Manager at Cotecna Brazil.

Luiz, Brazil is currently the world's top soybean supplier. Could you please tell us more about the quality of Brazilian soybeans?

The quality of Brazilian soybeans is one of the best in the world, produced with a high level of technology. However, for a few years, we have observed during our inspections a slight reduction of the protein content due to environmental and genetic characteristic changes, depending on the planted variety:

This season, the quality of soybeans (grading) has not been affected and is excellent, as shown in the below chart (exported goods Cotecna has supervised):

Can you please tell us more about the latest trends of the Brazilian soybeans' protein content?

Until the end of the 90s, Brazil produced soybean meal with 46% protein, even reaching 48% in some regions. Nowadays, these high levels are no longer achieved due to the decline in quality of the raw material. Mostly, the soybeans cultivars contain 30% to 45% protein and 15 to 25% oil.

The correlation between oil content and protein is inversely proportional: in other words, the more oil we find, the less protein we have, and vice-versa. On the other hand, the correlation between oil content and yields is directly proportional.

The vast literature on the subject shows that genetic factors mainly determine protein and oil content variation, but with a strong environmental influence, especially during grain filling. Plant breeding companies have been working to improve these characteristics; however, very few seeds have been commercialized because:

  1. A high emphasis is placed on increasing yield and disease resistance versus improving grain chemical composition.
  2. The negative correlation between protein concentration and yield, and between protein concentration and oil concentration, requires more time and effort in genetic improvement.
  3. A lack of economic incentive, up to now, for using genotypes with high protein content since the producers receive payment for the quantity produced and not for the protein and oil contents.

From Jan - March 2021, the Brazilian soybeans exports Cotecna has supervised (by ports of origin) presented the below protein contents:

The Brazilian soybean industry became a true winner in the US-China trade war, as it helped Brazil replace the USA in the supply of soybeans to China. Can you tell us more about the quality control of Brazilian soybeans supplied to China?

The Brazilian soybean exports quality parameters must comply with the ANEC Contract 41, which stipulates that:

  • Quality and condition must be certified at the time and place of shipment by a FOSFA Superintendent Member like Cotecna Brazil. The representative composite sample must be drawn as per the methods described in the FOSFA Standard Contracts.
  • Laboratory analyses must be conducted by a FOSFA Analyst Member like Cotecna laboratories in Santos and Paranaguá, with the below specifications:
    • Oil content: basis 18.5% (AOCS Ac 3 – 44) with a non-reciprocal allowance of 1% discount for each 1% deficiency, fractions in proportion, in buyer's favor for any deficiency;
    • Moisture: maximum 14% (AOCS Ac 2 - 41).
  • Grading must be performed by a FOSFA Superintendent or FOSFA Analyst Member registered at the Brazilian Ministry of Agriculture, with the below specifications:
    • Foreign matter: basis 1%, maximum 2% with a non-reciprocal allowance of 1% discount for each 1% deficiency, fractions in proportion;
    • Damaged beans: basis 8%, maximum 8.5% with a non-reciprocal allowance of 2% discount for each 1% deficiency, fractions in proportion, of which maximum 4% heat damaged and burned (maximum 1% burned) and 6% mouldy;
    • Broken beans: maximum 30%;
    • Greenish beans: maximum 8%;
    • Substantially free from poisonous seeds/husks.

Costs and choice of the provider are on the seller’s account, however the buyer can also appoint another independent surveyor to perform joint sampling and sealing.

Additionally, a Phytosanitary Certificate must be issued by ONPF from Brazil (MAPA) to guarantee that the products have been fumigated and are free from pest as prescribed by the destination country.

GMO soybeans represent the majority of Brazil exports. Is there any market for Brazilian non-GMO soybeans?

While over the last few years Brazil has exported non-GMO soybean meal to Europe, it has more recently lost market share to European and Indian non-GMO products. However, European production is not expected to grow much more than the current level, and exports from India tend to decrease due to the growth of its domestic chicken market and exports to Iran.

Another interesting fact is that, for the first time, we have seen Argentina producing substantial volumes of non-GMO soybean.

Logistics have always represented a bottleneck for Brazilian exports. Can you please share information about the current situation with inland and port logistics?

The current Brazilian Government has significantly increased investments in logistical infrastructure to ease the flow of the grains harvest, especially in the ports of the "North Arch". As a result, logistical costs have been reduced as well as the time taken to reach these ports.

According to SECEX in May 2021 (Special Secretariat for Foreign Trade), Arco Norte port facilities increased their corn and soybean export volumes by 30.2% (+ 9.8 millions tons) in 2020 when compared to exported volume in 2018 (32.5 millions tons).

Cotecna has a developed a network of labs and offices at key logistical points to provide the fastest and most reliable services in Brazil. Cotecna Brazil has laboratories in Barcarena, São Luis, Santos, and Paranaguá ports and operational branches in all ports of Brazil. In addition, all Brazil's staff undergoes continuous in-house training and updates to the most rigorous quality standards.

Cotecna Brazil is a member of recognized industry associations such as GAFTA, FOSFA, SAL, and is accredited with national bodies including the Federal Police, ANEC, MAPA, INMETRO. Cotecna is also ISO 9001 accredited, and the labs are ISO 17025 accredited.

Brazil is one of the biggest global markets of crop protection products. Were there any problems related to pesticide content/residues in exported Brazilian soybeans last year?

Brazil seemed to have punctual issues related to this matter. This is due to the high technology employed in grain production, which allows Brazil to be one of the world leaders in food production without deforestation, preserving through its restrictive environmental legislation reserves of natural or recovered forests in each area of agricultural output.

Is there any growth in the production of organic soybean in Brazil? If yes, what is the main challenges and the vital exporting destinations?

Organic soy production in Brazil is still in development when compared to the large production scale of traditional soy. Some initiatives and small associations appear as a niche market, mainly allocated for domestic consumption. As it's not decisive for crushing activities, large-scale production is not yet justified.

Can you share interesting data about the Brazilian soybean crop and exports in 2021 (both quantity and quality)?

CONAB confirms the previous information regarding growth of 4.1% compared to the last crop in the soybean seed area, reaching 38.5 million hectares.

With the high moisture of grains, quality problems have been increasing for a few weeks in Mato Grosso and North/Northeast of Brazil. In addition, the concentrated volume of soybeans leaving the fields with high humidity has caused a rush of trucks at the receiving points, with the standardization of the lots requires more time than usual.

Despite this scenario, a record production of 135.5 million tons is expected this season, representing an increase of 8.6% over the previous harvest (124.85 million tons). Total domestic demand (crush, seeds, and losses) is estimated at 50.44 million tons. It should remain strong due to the economy's growth, the increase in meat production for export, and the biodiesel mixture, which went from B12 to B13.

Exports are expected to reach a number close to 85.6 million tons, motivated by the strong Chinese demand and the high percentage traded for the 2020/21 harvest.

Thank you, Luiz, for these great insights about the Brazilian soybean market!

To learn more about our services in Brazil, or to request our services for your business, please don’t hesitate to contact us.

 

Sources: Conab/Alphamar Agency/Aprosoja/USDA/SECEX

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