April 11, 2018
Argentina buys most US soy in 20 years after drought cuts crop
Argentina, the world's third-biggest soy producer, booked its largest purchase of US soybeans in 20 years after drought cut its harvest, forcing crushers there to turn to imports.
The surprise move pushed Chicago soybean futures to a one-month high, in the latest development to upend global soy trading after top buyer China proposed tariffs on US imports amid an intensifying Washington-Beijing trade dispute.
The USDA in its daily export sale reporting system said 120,000 tonnes of US soybeans were sold to Argentina for delivery during the 2018-19 marketing season that starts on September 1 - the biggest such sale since 1997.
The USDA separately forecast Argentina's soybean harvest at 40 million tonnes, the smallest since 2009's crop of 32 million tonnes. Argentina is the world's top exporter of soymeal and soyoil.
"We're very rapidly seeing a realignment in soybean trading," said international agricultural trade and policy consultant John Baize, president of John C. Baize and Associates.
Baize said Argentina could import 500,000 to one million tonnes of US soybeans this year.
Bulk imports of US soybeans are rare, although Argentina typically brings in some soybeans from neighboring Paraguay.
Argentina will need soybeans by October, a time when crushers in the South American country usually lack sufficient domestic supplies, and crushers want to make sure they have enough after this year's drought. Argentina exporter chamber spokesman Andrés Alcaraz said the US soybeans sold this week would be crushed and exported as soymeal and soyoil.
"The industry already had a lot of idled capacity and now it is going to have even more because it does not have grain," Ezequiel de Freijo, chief economist at Argentina's Rural Society producers' group, said of soybeans.
European buyers have also scooped up cargoes of US soybeans in recent days. US soybeans have been a relative bargain due to surging prices in Brazil.
China, which buys about two-thirds of global soy exports, was favoring Brazilian supplies and threatening to impose tariffs on US soybean imports to retaliate against US tariffs on China's electronics and other goods.
Soybean futures on the Chicago Board of Trade initially plunged 5% after China announced the proposed tariffs but have recovered all of those declines.
CBOT May soybeans finished up 3 cents at $10.50 per bushel, after earlier reaching $10.64, the highest since March 9.