Market Talks: The jump in Brazil’s soybean imports amid the grain’s bumper crop

Author Argus

Increased soybean demand in Brazil during the Covid-19 pandemic has boosted the country’s imports, despite Brazil achieving its highest ever soybean crop this year, narrowing the country’s trade balance in this commodity.

What’s behind this trend and which markets could benefit in the short-to-medium term?

In this week's episode of Market Talks, Argus’ Brazil Bureau Chief, Camila Dias, and Agriculture and Fertilizer Reporter, Jose Roberto Gomes, analyze the changes in Brazil’s soybean trade balance.

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Camila Dias: Hello and welcome to ‘Market Talks’- a series of weekly podcasts brought to you by Argus covering the main events impacting the commodity and energy sectors in Brazil and worldwide. My name is Camila Dias, Argus Brazil Bureau Chief. In today's episode, I talk to José Roberto Gomes, Argus Agriculture and Fertilizer reporter, about the increase in soy imports by Brazil. Welcome, José Roberto.

José Roberto Gomes: Hi, Camila, and thanks. It’s a pleasure to be here.

Camila: José, Brazil harvested a record soybean crop this year and, even so, has increased its soybean imports. Why is that?

José Roberto: Camila, Brazilian soy production was historic in 2020, at almost 125 million tons, according to the National Supply Company, Conab. But the depreciation of the Brazilian real against the US dollar throughout this year has made the country's oilseed even more competitive in the international market, raising domestic prices as well and stimulating sales by farmers.

The result? Very heated exports so far this year, which wiped out domestic inventories. And then the need to import more arose as we still have strong domestic consumption despite the Covid-19 pandemic, mainly for animal feed and use in the biodiesel industry. And Camila, it is worth remembering: we are talking about soybean imports by the global top producer and exporter of the commodity.

Camila: It's true, kind of ironic. José, how is Brazil’s soy export and import balance?

José Roberto: Look, Camila, according to the latest government data, Brazil exported around 70 million tons of soybeans from January to July, a record volume for the period, with China as the main importer.

The increasingly scarce supply around here has brought oilseed export premiums closer to 2 dollars per bushel in the Paranaguá paper market, where trading firms negotiate export volumes. For you to have an idea, it is the highest level since 2018, when the United States and China were at the peak of the trade war and Beijing boosted purchases of Brazilian soy.

On the import side, volumes impress too. Almost 400 thousand tons were imported from January to July, the highest amount for this period since 2014. It seems small at a first glance, but it is significant, since, again, we are talking about the largest producer of the commodity. The expectation is that this quantity will increase in the coming months, as Brazil will only have its supply again as of January, with the harvest of the 2020-2021 season.

Camila: Are there any predictions for total soy imports by Brazil in 2020?

José Roberto: Analysts and other market agents estimate that the country might import around 1 million tons to meet domestic needs. If accurate, it will be the largest volume since 2003, when we imported 1.2 million tons.

Camila: José, where do these imports come from?

José Roberto: Most of it comes from Paraguay, which had a fair harvest this year, of around 10 million tons. But it is a small country, with a much lower local demand than Brazil and, therefore, has a surplus to send to Brazil. Trade is facilitated by the fact that both countries are part of the Mercosur trade bloc, so there are no tariffs on these sales.

This Paraguayan soy ends up having Paraná as its main destination as the Brazil’s southern state borders on the neighboring country.

Camila: Recently, the Brazilian government said it was considering facilitating soy imports from countries outside Mercosur. How is this discussion developing?

José Roberto: Camila, this idea came up in late August and involves not only soybeans but also corn and rice. Today, there is a 12 percent tariff on rice and and an 8 percent one on soybeans and corn imported from non-Mercosur countries.

The government's goal is to eliminate these tariffs, including the three commodities in an exception list, the so-called Letec. The government claims that the measure is purely a cautionary one since there is no immediate need for massive imports of these products.

The idea will be formally analyzed by the government in September. And if approved, it could benefit an important commodity exporter: The United States. Let's see.

Camila: Thank you very much, José Roberto. If you want to know more about the global commodities market, visit our website For information on the impacts of the pandemic, visit our dedicated microsite on the subject at We will be back soon with another edition of “Market Talks”. See you later!

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