Argentina becomes second largest buyer of Brazilian soy in 2023

Argentina became the second main destination for Brazilian soy in the first five months of 2023, as it had to boost imports in response to a historic drought that severely affected its crop.

Brazil’s soy exports to its neighbor from January to May reached 1.92 million metric tons, while the volume shipped in May alone was 978,500 metric tons, official data showed, while analysts still see room for more.

Argentina, the third largest global soybean producer behind Brazil and the United States, saw its crop shrink 43% to 25 million metric tons in 2022/23, according to figures from the U.S. Department of Agriculture (USDA). Argentina’s Rosario grains exchange estimated an even smaller harvest, closer to 20.5 million metric tons.

With a large export industry for soy oil and meal, Argentina had to increase imports of the raw bean, which are expected to double to about 9 million metric tons in the current season.

he chart below shows Argentina’s exports of soy oil shipped in containers between Jan 2019 and Mar 2023, according to the DataLiner maritime data service by Datamar.

Soy oil exports from Argentina | Jan 2019 – Mar 2023 | TEU

Source: DataLiner (click here to request a demo)

Although it was expected that Brazil would meet much of this demand, the volume exported in May was enough for Argentina to overtake Spain as the second largest buyer of Brazilian soy, behind China, the data showed.

The increase in shipments of Brazilian soy helped improve supply to Argentina’s crushers, which also began to buy more beans from local producers following the government’s so-called ‘soy dollar’ program, said Gabriel Faleiros, analyst at S&P Global Commodity Insights.

This tends to limit, in the very short term, the need for a new avalanche of imported Brazilian soybeans, he added, while also agreeing that volumes imported by Argentina are still expected to increase throughout the year.

The crushing margin in Argentina made it better to import than buy soybeans internally. That’s why imports were favored,” said Faleiros. “We don’t see this scenario anymore. Recently, in June, the profitability of imported Brazilian soybeans is no longer above domestically purchased soybeans.”

According to the analyst, with the imported volume and the government’s “soy dollar” program encouraging sales by Argentine producers, there was greater availability for the industry.

S&P Global Commodity Insights reduced its forecast for total soybean imports by Argentina this year to 9 million metric tons from 10 million previously.

Argentina should import about 5 million metric tons from Paraguay this year. Brazil is still expected to export an additional 2 to 3 million metric tons to the neighboring country, Faleiros said.

In the assessment of Daniele Siqueira, an analyst at consultancy AgRural, exporting soybeans from Brazil to Argentina depends more on Argentina than on Brazilians.

“If they want and can buy it, we have soybeans to sell, as our production was very large in the 2022/23 harvest,” she said, referring to the record national harvest, which surpassed 155 million tons, according to official figures.

Source: Forbes

To read the original report, see: https://forbes.com.br/forbesagro/2023/06/argentina-se-torna-o-2o-destino-da-soja-do-brasil-em-2023/

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