With a loss of over R$40 billion, Brazil had a negative premium, for the first time, in soybean and corn exports for two consecutive years. 

A study commissioned by Kepler Weber shows that losses arising from lack of logistics infrastructure directly impact soybeans and corn.

Ribeirão Preto, May 2, 2024 – Brazil will have, for the first time, two consecutive years of negative export premiums for soybeans and corn due to a deficiency in the country’s logistics chain. This is what a study commissioned by Kepler Weber, the Latin America leader in storage solutions, processing and handling of grains, revealed during its release at the Agrishow event, in Ribeirão Preto, in the countryside of the State of São Paulo.

“The study is impressive because it demonstrates the cost of post-harvest inefficiency, from farms to shipment at ports in Brazil. The country will lose R$41.4 billion during the years of 2023 and 2024, combined”, said Bernardo Nogueira, CEO of Kepler Weber.

The grain export premium can be positive or negative, and its formation will depend on variables such as exchange rate and, for soybeans, the amount paid in Chicago (USA) compared to the grain price when it arrives at the ship (Free on Board). The premium considers the origin and destination of the exported product, as well as the quality, opportunity, maritime freight, demand and efficiency of the exporting port. The market monitors these factors and applies this premium to the price on the Chicago Stock Exchange (CBOT). If conditions are favorable at the exporting port, the premium will be positive. If conditions are unfavorable, the premium will be negative. During harvest, supply and demand volumes at ports also impact costs. Very large volumes that need to be transported increase road freight costs, while export premiums may depreciate. In addition to this variation, there is also a seasonality in premiums at ports. Premiums are negotiated constantly during the year.

“To a large extent, this problem begins with the fact that Brazil has a storage deficit of over 100 million tons, since the lack of storage for what is produced impacts the formation of premiums in the export market”, highlights Nogueira.

Corn

The study shows that accumulated losses during the two years will be greater in corn, totaling R$21.2 billion. Last year, negative premiums impacted the results for this commodity between May and September. This year, the negative period began a month in advance, and is projected to occur between April and September.

Soybean

For soybeans, losses totaled R$20.1 billion in 2023 and 2024. Last year, negative export premiums impacted results between March and July, this year, the impact will be between January and May.

“Investment in storage brings greater efficiency to the agribusiness chain which, at the end of the day, gives decision-making power to the farmer in terms of when to sell and handle the crop, and this leads to better profits”, concludes Nogueira.