Soy Squeeze in Brazil Drives Bunge Plants to Buy Uruguayan Beans

(Bloomberg) -- A small soybean-producing nation is helping crop giant Bunge SA supply its processing plants in Brazil, where stockpiles of the oilseed are at the lowest in decades.

Bunge’s Brazilian unit took the unusual step of buying three cargoes of 30,000 metric tons each from Uruguay in the past few weeks, according to people with knowledge of the matter. The crop used for everything from cooking oil to animal feed and fuel will be processed at the firm’s Rio Grande plant, the people said, asking not to be identified because the transaction is private.

Bunge didn’t respond to a request for comment.

Brazil is the world’s biggest producer of soybeans, but its processing industry has accelerated imports in the past few months after strong exports eroded stockpiles. Imports through August quadrupled from the same period last year to 477,372 tons, Economy Ministry data show.

Almost all of that came from Paraguay. But Uruguay, whose production represents less than 2% of Brazil’s crop, is also appearing among the suppliers.

“That reflects Brazil’s low supplies and high local prices as farmers hold the few beans left,” said Luiz Fernando Roque, an analyst at Safras & Mercado consulting firm.

Crushing margins in Brazil remain attractive as strong demand keeps domestic prices high for meal and oil. Brazil may import 850,000 tons in 2020, the highest since 2003, when its production was about 50 million tons, less than half current levels, Roque said.

Brazil reaped 124.8 million tons this season, an all-time high, according to state-run crop forecaster Conab. Exports through August were at a record pace amid robust Chinese demand and local currency weakness. That will leave ending stocks at 419,000 tons, according to soy processing group Abiove, the lowest since the data series began in 1999.

©2020 Bloomberg L.P.