Latin American soy crush to rise in 2024 on crop recovery, higher biodiesel mandate

According to S&P Global Commodity Insights’ estimates, the combined crush for Argentina and Brazil is pegged to reach 92.10 million mt in 2024, jumping 15.3% from 2023, when Argentina saw its harvest cut by around half following a historical drought.

Argentina lost its top position for soybean meal to Brazil in 2023 because of a historic slump in raw bean production led by drought conditions and subsequent tightening of byproducts stocks.

Argentina’s soybean harvest

For marketing year 2023-24 (April-March), S&P Global predicts the Argentinian soybean harvest at 50.50 million mt, more than double in comparison with 22 million mt in the previous season.

“Most crucial aspect for soybean value chain is the availability of raw material. In this new campaign 2023-24, the El-Nino phenomenon corrected the lack of soil moisture and allowed a correct planting season,” said Javier Preciado Patino, agriculture analyst and former undersecretary of the agricultural markets at Argentina’s agriculture ministry.
“Right now, 97% of the soybean plots in Argentina are in normal to excellent condition. We hope a 48 [million]-50 million mt output, that would allow the oilseed industry to recover its average crushing,” Patino said.

Over the previous three years, Argentina faced the consequences of the La Nina weather pattern, which brings below-normal rains. However, wetter conditions observed this time due to a strong El Nino supported local crop development.

There is certain optimism among market participants with the country’s new president, Javier Milei, who took office Dec. 10. The new government has raised the official forex rate to Peso 800/$1 and set a blended exchange for agricultural exporters, combining 80% of the official currency with 20% of the free one CCL. On the other hand, Buenos Aires intends to raise the export tariffs for soybean meal and oil.

“Argentina soybean industry will recover its average level of crushing activity in this new campaign 2023-24. The only threat is the decision of the government to increase the export taxes of the byproducts from 31% FOB price to 33%, a policy that could boost the soybean exports instead the byproducts,” Patino said.

Throughout 2023, spot prices for FOB Upriver soybean meal cargoes surpassed those seen in Brazil’s FOB Paranagua, contrasting with a historical pattern as Argentina is used to trading below Brazil because of logistical and geographical issues.

The soybean meal FOB Upriver outright price gained 5.9% in 2023 through Dec. 22 to reach at $446.38/mt, according to S&P Global data. The FOB Paranagua value, in turn, gained 0.6% in the period to reach at $448.75/mt.

Source: S&P Global

Click here to access the original report: https://www.spglobal.com/commodityinsights/en/market-insights/latest-news/agriculture/122623-latin-american-soy-crush-to-rise-in-2024-on-crop-recovery-higher-biodiesel-mandate