February 9, 2004
Brazil, Argentina Unconcerned By Proposed US Soy Import Ban
A proposed U.S. ban on Brazilian and Argentine soy exports would have little impact on the South American soy industry but raised concerns other bigger buyers could follow suit, local sources said.
"South America only exports a very small amount of soymeal to the U.S. And anyway, the ban is still only a proposal," said Anderson Galvao Gomes, soy analyst at the Brazil-based Celeres agricultural consultancy.
On Friday, Rep. Tom Latham, R-Iowa, introduced to the U.S. House of Representatives a bill banning imports of South American soybeans and soy products in an attempt to prevent the spread of Asian rust, a fungal disease that can devastate crops, to the U.S.
Last year, Brazil exported 50,000 metric tons of soymeal to the U.S. while Argentina exported 172 tons.
But following losses to the world-leading U.S. crop, this year U.S. import demand for soybeans and soymeal is expected to grow. In November, North Carolina-based Wilmington Bulk LLC, a hog and poultry consortium, purchased up to 90,000 tons of Brazilian soymeal for delivery from April.
"Given this context, this possible ban on soybeans acquires relevance that it wouldn't have in other years," said Carlos Poullier, an analyst of foreign markets at Argentina's Agriculture Secretariat.
But demand elsewhere is buoyant and these values are insignificant compared with the volumes produced here, added one trader at an export house in Sao Paulo.
Brazil will produce 60 million tons of soybeans this year, while Argentina will produce 36.5 million tons, according to U.S. Department of Agriculture figures.
The Brazilian government feels the bill is unlikely to be approved and is probably no more than electioneering ahead of the presidential elections in the U.S., said Macao Tadano, the Brazilian Agriculture Ministry's sanitation and health secretary.
However, Brazilian traders said the greater concern is that major importers of South American soy with significant soybean crops, such as China and Europe, could follow the U.S.'s lead.
Such a reaction was currently unlikely given the scarcity of soybeans on the world market but could become a possibility should production in the U.S. and South America rise sharply over the next year.
Asian rust, which kills leaves and thus impairs the plants ability to carry soybean pods, has spread across virtually the whole of the Brazilian soybean belt, causing $1.3 billion of damage last year. Isolated cases have been discovered in Argentina this year.
Latham's bill would prevent the fungus' spread to the U.S. via leaves and twigs mixed into shipments.
However, scientists believe the fast-spreading fungus is carried on winds and think it likely that it will eventually reach U.S. fields.
In the short term, Celeres' Gomes said U.S. prices could rise slightly on the news as potential sources may be discarded, but Brazilian discounts would widen.