June 22, 2023

 

Argentina boosts soybean imports from Brazil amid severe drought

 

Argentina has emerged as the second main destination for Brazilian soybeans in the first five months of 2023, driven by the need to increase imports due to a historic drought that severely impacted its own crop, Nasdaq reported.

 

Official data revealed that Brazil's soy exports to Argentina reached 1.92 million metric tonnes from January to May, with an additional 978,500 metric tonnes shipped in May alone. Analysts suggest that there is still potential for further growth in these imports.

 

Argentina, the world's third-largest soybean producer after Brazil and the US, experienced a 43% decline in its crop, estimated at 25 million metric tonnes for the 2022/23 season, according to the US Department of Agriculture (USDA). However, the Rosario grains exchange in Argentina projects an even smaller harvest of around 20.5 million metric tonnes.

 

Given Argentina's significant export industry for soyoil and soymeal, the country had to increase its imports of raw soybeans. It is expected that imports will double to approximately 9 million metric tonnes in the current season.

 

Despite the anticipation that Brazil would fulfill much of this demand, the volume exported to Argentina in May surpassed that of Spain, making Argentina the second-largest buyer of Brazilian soybeans after China.

 

The rise in Brazilian soy shipments has helped alleviate supply constraints for Argentina's crushers. In addition, local crushers have increased their purchases from domestic producers under the government's 'soy dollar' program, Gabriel Faleiros, an analyst at S&P Global Commodity Insights said.

 

Faleiros said that this trend may temporarily reduce the immediate need for a surge in imported Brazilian soybeans. However, he also acknowledged that Argentina's import volumes are still expected to grow throughout the year.

 

S&P Global Commodity Insights has revised its forecast for Argentina's total soybean imports this year to 9 million metric tonnes, down from the previous estimate of 10 million metric tonnes. Additionally, Argentina is projected to import around 5 million metric tonnes from Paraguay.

 

Faleiros said that Brazil is still anticipated to export an additional 2 to 3 million metric tons to Argentina, further meeting the country's soybean needs

 

-      Nasdaq