Brazil’s vegetable oil industry association, Abiove, has recently raised its soybean export estimate to 40.5 million tons, up from 39 million tons estimated in June while lowering its crushing estimate to 35.9 million tons from its previous estimate of 37.2 million tons. Despite a record harvest of 81.6 million tons of soybeans, Brazil’s level of soybean crushing is at its lowest point since 2009. Crushing between February and July of this year totaled 19.3 million tons – down 7% from the same time period in 2012. Droughts last year destroyed millions of tons of soybeans tightening supply and raising prices which crushers have had a difficult time passing on to customers in the Brazilian feed and cooking oil industries. In addition to sight supplies, Brazil has changed its tax code earlier in 2013 lifting the PIS/Cofins social security and payroll tax from the cooking oil industry leaving the industry with large amounts of tax credits that are now worthless and are not able to be used against other tax liabilities. Idle capacity at the crushers will likely affect the major grain traders of ADM, Bunge, Cargill, Dreyfus and Noble.
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