Cargill sees Chinese buyers demanding fewer Brazilian soybean

SAO PAULO (Reuters) - Chinese demand for Brazilian soybeans this year is lower than expected, which explains why Brazil’s record harvest has not yielded monthly export records, the chief of commodity trader Cargill’s Brazil unit said in an interview.

FILE PHOTO: A Cargill logo is pictured on the Provimi Kliba and Protector animal nutrition factory in Lucens, Switzerland, September 22, 2016. REUTERS/Denis Balibouse

Paulo Sousa, the U.S. commodity giant’s local chief executive, spoke to Reuters on Wednesday ahead of the release of earnings data for the Brazilian unit last year.

“The demand is good, but it’s not great, it’s not so hot, especially the Chinese demand. They’ve been buying, but at a pace below what the market expected,” said Sousa.

Sousa said he preferred not to comment on the reasons for this year’s underwhelming Chinese purchases, the largest global importer of soybeans, only offering that the “post-pandemic scenario left many doubts.”

The lower-than-expected demand from the China allows more constant Brazilian grains exports throughout the year, Sousa added, which should reduce stress on logistics during the current crop, which is forecast to hit a record high.

Cargill’s net income in Brazil last year fell to 1.2 billion reais ($238 million), compared with 1.8 billion reais in the previous year, due to rising costs for logistics and production.

Net operating revenue in Brazil grew 22% in 2022 to about 126 billion reais, boosted by soybean processing and increased corn exports, Sousa said.

“Because of China (and) despite a record harvest and the logistics working well, we are not breaking monthly records for exports volume because there isn’t that furor of demand,” he added.

Brazilian soybean premiums at ports fell to historic lows last week due in part to lower Chinese demand.

($1 = 5.0440 reais)

Reporting by Roberto Samora; Writing by Peter Frontini; Editing by Leslie Adler