July 26, 2004

Soybean Price Dip Costs Argentina $937 million

A drop in the world price of soybeans over the past three months will result in a loss of $937 million in export revenue for Argentina.

The estimate provided by farm experts was calculated based on Argentine soybean exports of 16 million tons at a time when the price of the grain has fallen 25% since last April.

Despite the price drop, soybean is currently quoted in the range of 170 US dollars per ton, a 7.5% increase compared to a year ago, when prices began to climb on international markets. Experts attribute the price drop to lower demand from China, as well as favorable weather in the United States which is the world's largest soybean producer, followed by Brazil and Argentina.

Ricardo Baccarin from Argentine agriculture consulting company Panagricola is quoted saying that the trend toward lower soybean prices will strengthen if U.S. production increases, as forecasted.

Soybean prices on the Chicago Mercantile Exchange last Thursday dipped to their lowest level since last September.

According to one trader at the Argentine Grain Exchange, soybean "has entered a critical zone" in which price recovery "is not in sight." China buys 70% of Argentina's soybean, and imported 8.85 million tons of the grain last year, according to official figures.

Argentina is forecast to produce 34.7 million tons of soybean during the current harvest, compared with the 35.2 million tons in the 2002-2003 season.