How the new crown epidemic will affect the Brazilian soybean and domestic meal market

Brazil is one of the three major soybean producing countries (4689, 36.00, 0.77%) in the world. The 2019/20 annual output is expected to reach 125 million tons. About 35% of the world ’s soybeans come from Brazil. Therefore, the normal supply of Brazilian soybeans The oil market plays a vital role. Since March 2020, the new Coronary Pneumonia epidemic has begun to enter the diffusion stage in Brazil. The increase in the epidemic data has also increased market concerns about later Brazilian soybean transportation and shipment.

How the new crown epidemic affects the Brazilian soybean and domestic meal market

　　Brazilian soybean is vital to China's soybean supply

　　A small part of China's soybean supply comes from domestic soybeans, and most of the domestic soybeans flow into the edible link, while a large amount of domestic crushing needs are completed by imported soybeans. In 2019, China imported about 88.59 million tons of soybeans, of which 57.67 million tons were imported from Brazil, accounting for 65% of China's total soybean imports that year. The increase in China's dependence on Brazilian soybeans is largely due to the intensification of contradictions between the past two years. While Brazil is taking advantage of fishermen, it has further increased the soybean planting area in 2019/20, and its annual output is expected to be Reached 125 million tons, breaking the historical high, an increase of 8% from the previous year's 117 million tons. Because Brazil has a crucial strategic position, China is also actively carrying out strategic deployments to Brazil. For example, COFCO has set foot in the Brazilian soybean industry since 2014. Now it has formed a situation of resistance to the four major international grain merchants. Brazil COFCO International exported 12.27 million tons of soybeans to China in 2018, ranking among global soybean exporters.

　　Overview of Brazilian soybean planting and transportation

　　Brazilian soybeans are genetically modified soybeans. Since they are located in the southern hemisphere, they are sown in October every year and harvested and marketed from February to February of the following year. Its main production areas are distributed in the southern and central and western regions, of which the soybean production in the southern and central and southern regions accounts for about 42%, the soybean production in the central and western regions accounts for about 45%, and the northern and northeastern regions accounts for about 10%. With the passage of time, Brazil's main soybean producing areas have gradually moved northward in recent years. In the past ten years, with the acceleration of reclamation, the planting area of Brazilian soybeans has also increased rapidly at an average annual rate of about 5%.

　　The four ports of Brazilian soybean exports are Santos, Rio Grande, Paranagua, and South San Francisco. Due to terrain reasons, barge and rail transportation are not developed. The most important way to transport soybeans to the port is road transportation, which accounts for more than 50% of the national transportation volume. Brazil is currently investing more in the layout of railway and waterway infrastructure. According to the Brazilian National Transport Federation, by 2025, Brazil ’s railway transportation will reach 35%, roads will reach 30%, and waterways will reach 29%, but due to various reasons At present, the process is still very slow, and soybean transportation is still dominated by road trucks. However, Brazil's overall road facilities are not perfect, and the road surface is poor. In case of weather or other special problems, it will often have a significant impact on the speed of transportation and increase costs. And because roads are the main mode of transportation in Brazil, the union of truck drivers has a strong influence throughout the country. Once the driver strikes, the entire Brazilian soybean transportation will be paralyzed, and the progress of Brazilian soybean exports will be greatly affected. Affect market conditions.

　　Potential impact of the new crown epidemic on the Brazilian soybean industry

　　Brazil is located in South America, and the official language is Portuguese. It has a similar social personality to the Mediterranean such as Italy and Spain, and likes to go out and gather. And among Brazil's 210 million people, 6.5 million people live in nearly 4,000 slums, with a high density of living environments and a higher risk of epidemic transmission. Compared with the speed of the epidemic in Italy and Spain, Brazil is currently in a state of mid-March. As of April 8, the number of diagnoses in West and Italy is around 150,000, and the number of deaths is about 15,000. The mortality rate Nearly 10%, while the population of Brazil is about 3 times that of Italy and 4 times that of Spain. The number of people diagnosed in the future will exceed the two countries. However, it differs from Brazil in that both countries are regions with high aging. According to World Bank data, the proportion of people over 65 years old in Spain and Italy reached 19.38% and 22.75% of the total population, respectively. The degree has also exacerbated the rise in mortality. It is more optimistic that Brazil ’s population over 65 years old only accounts for 8.92% of the total population. However, as of 2016, Brazil ’s per capita medical and health expenditure was US $ 1016 / year, while Italy and Spain were US $ 2739 / year and 2390 yuan / year, respectively. Brazil ’s per capita medical expenditure is still less than half of Italy and Spain. Next, Brazil faces more serious medical challenges.

　　Brazil has now entered the stage of rapid epidemic spread. Since March, President Bosonaro has continued to downplay the severity of the new crown epidemic on various occasions and has been emphasizing the importance of economic activity. However, with the rapid growth of cases, the state governments And the army has stood opposite the president. Polls show that 76% of Brazilians support isolation measures at the cost of the economy. However, there are 38 million people in informal work in Brazil, and most of them do not have enough savings to survive the epidemic crisis. The Brazilian Slum Data Institute pointed out that due to the outbreak of the new crown epidemic, the income of 70% of slum families in Brazil has declined. Brazilian infectious disease experts predict that the peak period of the Brazilian epidemic may arrive between April and May, and this time is also at the peak period of soybean market. The domestic transportation shortage in Brazil and the peak period of soybean market may overlap or will be later. Soybean supply chain lays hidden worries.

　　As the new crown epidemic began to spread in Brazil, Brazilian soybean crushers and farmers faced the problem of increased road freight costs, and truck drivers' willingness to run long distances in front of the epidemic declined. According to Brazil ’s NYC & Logistica ’s data, affected by the epidemic, Brazil ’s trucking volume has dropped by 26%, the number of trucks hauling grain has dropped by 11%, and grain transportation costs have risen by 10.5%. At the same time, the port also faces risks. Although the port workers in the port of Santos in Brazil have temporarily stopped voting for strikes, and because many companies have stocks at the main terminals, even if the short-term trucks cannot enter the port, it will not affect the shipment. However, if the epidemic further spreads, it will have an impact on logistics and trade. Driver drivers ’strikes, port workers’ strikes, layoffs and curfews in port cities, restrictions on roads from production areas to ports, etc. all require attention. Once the number of diagnoses and deaths rises further, it may lead to stricter control measures. Whether or not huge soybean exports can be realized still needs attention, but the increase in transportation costs may provide some support for soybean and soybean meal (2771, -12.00, -0.43%) prices in the later period.

　　At present, shipments of Brazilian soybean ports are still in full swing. According to data from the Brazilian Ministry of Commerce and Trade, as of March 31, Brazil has accumulated 10 million tons of soybeans shipped to China. As of April 8th, all ports in Brazil shipped 2.24 million tons of soybeans to China. The time from Brazil to China is about 40 -50 days, until mid-late April, China's current tight soybean supply environment will be significantly improved. At present, the Brazilian port Santos port union is also calling on the government to take measures to protect workers ’rights and provide additional protective equipment during the epidemic. The port is still in normal operation. However, the epidemic situation is far from the most serious period. According to the development speed of Spain and Italy, assuming that the Brazilian epidemic situation reaches its peak in half a month, and Brazil ports have different degrees of closures, it will obviously affect our country ’s after June Soybean supply.