soybeans China

Soy dollar: Differentiated exchange rate turn Argentine soy sales more competitive

Sep, 09, 2022 Posted by Gabriel Malheiros

Week 202236

The Rosario Stock Exchange reported that around 3.1 million tonnes of soybeans have already been traded in three days of Argentina’s ‘soy dollar’ policy. Such a volume accounts for 56.36% of the volume exporters expected to sell, including new deals already closed on previous days but with prices yet to be fixed.

The measure went into force earlier this week and netted $1.075 million. According to local sources, at this rate, the Argentine government’s objective of invoicing US$ 5 million may be accomplished.

Also according to Rosario, the average value of the Argentine soybean was close to 68,840 pesos on September 7, down 1% from the previous estimate due to negative pressure in Chicago. On Wednesday’s session, oilseed futures shed more than 1% on the CBOT in an intense profit-taking move.

According to calculations by Gustavo Idígoras, president of Argentina’s Vegetable Oil Industry Chamber and the country’s Cereal Exporters Center, if the pace remains the same, sales of the oilseed in September could reach 5.5 million tonnes.

See below the track record of Argentine exports of soybeans (HS 1201) in containers from January 2021 to July 2022. The data is from DataLiner.

Argentine exports of soybeans (HS 1201) | Jan 2021 – Jul 2022 | TEUs

Source: DataLiner (click here to request a demo)

Chinese purchases

China is one of Argentina’s main customers. The Asian nation has taken advantage of more competitive products and market opportunities.

“China is expanding its purchases of soybeans from Argentina as it seeks to replenish its reserves. Offers from Argentina usually are 40 cents cheaper than American soybean deals for October, and 60 cents in relation to Brazil,” explains the market analyst Eduardo Vanin from Agrinvest Commodities.

The “soy dollar” measure will remain in effect until September 30, and, until then, according to Vanin, the most important question to be asked is how much volume Argentina will be able to gain over the US this month.

“Some might say 4 million tonnes, which could make a big difference down the road since Brazilian soy is already offered at a discount for January,” adds the analyst. “Bad margins in Argentina are favoring exports. In other moments, when the retenciones applied to soybeans were higher over derivates, the market would tend to favor crushing since everything is at 33% today.”

China still needs to buy another 18 million tonnes of soybeans by the end of January to be adequately supplied.

“Sinograin sold just over 2.5 million tonnes of its soybean reserves, grain that it needs to replace within 90 days. Traders comment that Sino bought several boats in those two days, taking the opportunity to diversify and pressure premiums, mainly in the US. These grains compete directly with the US soy offered by the PNW (Pacific ports).”

Source: Notícias Agrícolas

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