This year Brazil could displace Argentina as the main exporter of oilseed meal. Higher idle capacity and lower profitability are expected.
The local soybean milling industryone of the most important in the world and that even positions Argentina as a leader in soybean meal exports, is going through a complex situation as a result of the drought. The truth is that the projections indicate that the outlook would worsen in the short term due to the increase in idle capacity -due to the lack of quality grain- that would lead the country to lose its leadership in the hands of Brazil.
Specifically, the projections of the soybean crushing industry indicate that the current harvest would be between 22 and 23 million tons and in this context, they should be imported 10 million tons to meet the basic demand of international buyers. “The world supply of soybean meal is largely concentrated in three main players, among which Argentina has been, since 1998, the main exporter.
The notable increase in the share of world exports of soybean meal, hand in hand with key investments in oilseed processing factories in Greater Rosario, have also made this product the main export product of the Argentine economy. . However, the relative stagnation that soybean production has had in Argentina is combined this year with a brutal drought to result in a soybean crush projection for 2022/23 of just 28 million tons, the lowest volume since 2004.. This is, even below the grinding of the last great droughts (2008/09, 2011/12 and 2017/18) ”, they explain from the Rosario Stock Exchange.
Within this framework, the scenario in terms of the relevance of Argentina in international trade appears complex at least, and this is how the Rosario entity explains it: “Brazil predicts a record soybean production of 153 million tons for the new season, according to the United States Department of Agriculture, 23.5 million tons above the previous year. As a consequence, the Brazilian industry could also achieve the largest processing volume in its history, with close to 53 million tons, giving rise to a forecast of flour exports of between 21 and 23 million tons, according to different sources.. If so, the neighboring country could once again establish itself as the world’s leading exporter of soybean meal, dethroning Argentina for the first time in 26 years.”.
Argentina, which in 2010 supplied more than half of world exports of soybean meal (51%) would thus fall to a participation of barely 29% in the 2022/23 campaign, while in the same period Brazil would have grown from 23% to 31%.
Meanwhile, days ago the agro-industrial sector raised its concern about the existence of soybeans with quality problems, particularly green beans, beyond the shortage due to the drought and the consequent increase in idle capacity in the plants.. In other words, the grain they receive in their factories is far from the quality they usually used, but based on an agreement with the collecting and productive sector, the standards will be made more flexible in order to have grain to grind.
In short, during this campaign there will be a lack of raw material to industrialize and this will logically have an impact on the foreign exchange income of the sector, which, According to the latest projections, the soybean complex alone would contribute some US$7.3 billion than a year ago.
Source: Ambito
