Argentina is facing one of the worst droughts in 100 years, which has reduced the soybean harvest by 45% compared to initial estimates”.
Sol Arcidiacono, Head of Latin American Grains at hEDGEpoint Global Markets
Brazil will need to supply up to half of the soybeans Argentina will import to keep its industrial operations running amid a historic drought that devastated the 2022/23 crop for the country, typically the biggest exporter of soybean oil and meal, analysts say.
Faced with an Argentine crop estimated by the market at around 25 million tons, from 42 million last season, the country could import up to 10 million tons of soybeans, or more than double the volume purchased in previous years, when the origin was mainly Paraguay.
Counting on a record crop, Brazil could increase shipments to Argentina by at least 10 times, said Sol Arcidiacono, head of Latin American grains at hEDGEpoint Global Markets, who works in Rosario, Argentina’s main soymeal and oil production center. . He recalled that the annual average of soybean shipments from Brazil to Argentina would normally be 300,000 tons, but in 2023 the Brazilians could account for the supply of at least 3 million tons, since Paraguay would not be able to supply the additional volumes that the Argentines need.
“(There is) the possibility of reaching 5 million tons if international soymeal prices pay – and I think they will – as Argentine soymeal supply is hard to replace,” Arcidiacono said. The expert pointed out that in addition to the fact that the country is facing one of the worst droughts in 100 years, which has reduced the oilseed harvest by 45% compared to initial estimates, commercialization by Argentine farmers is the lowest in 20 years.
“Brazil, if it confirms a harvest of more than 152 million tons, would have the capacity to export up to 97 million tons (for all destinations) and could meet practically all the import demand from Argentina,” said Carlos Cogo, director of the consultancy I take.
He agrees that Brazil could export 5 million tons of soybeans to Argentina, or more. Cogo noted that Paraguay is also an important supplier, but has supply constraints.
Luiz Fernando Roque, an analyst at Safras & Mercado, commented that Brazil shipped almost 230,000 tons of the oilseed to Argentina in the first two months of 2023, compared to just 167 kilos in the same period last year.
