Paraguay Soybean: Large Planted Areas, Yet Low Harvest Forecast
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Paraguay is a small but important exporter of grains and oilseeds including Soybean, primarily to its neighbors Brazil and Argentina. It supplies markets further afield, but its landlocked position in South America creates extra costs compared to its competitors, with river transport used to get grain and oilseeds to the coastal ports.
The fastest growing import markets in Soybeans for Paraguay between 2019 and 2020 were Brazil ($685k) and Argentina ($489k). The United States soy trade had little influence on South America’s production because the US grows enough to meet its own demand. Nonetheless, the demand from the east has been vast enough to spur a 69% increase in Paraguay’s soy production over the past five years, making Paraguay the world’s third largest exporter of soy.
The Institute of Agricultural Biotechnology (Inbio) of the country indicated that the seasonal Soybean that was produced in 2022 covered 459,339 hectares, some 346,792 hectares more than in 2021, when the area destined for this crop reached 122,544 hectares. However, due to the drought, Paraguay’s production is forecast barely reach 2.97 million tons in 2022, 68% less than in 2020/21. The average yield is only 900 kg/ha, the lowest figure in Paraguay’s history, which leads to increased idling Soybean oil processing plants.
Paraguay’s key producing departments (provinces) are Alto Parana, Itapua, Canindeyu, and Caaguazu, and San Pedro. The departments in which the most area was allocated to Soybeans in zafriña were Alto Paraná, with 47% of the planted area, Caaguazú with 17% of the area and Canindeyú with 13%. The department of Itapúa, which in 2021 had the largest planting area for this item in zafriña, ranks up to fourth place, with 10% of the area.
The department of San Pedro, despite having 10% of the planting area for this crop, almost tripled in relation to the area allocated last year, going from 6,664 hectares in 2021 to 17,893 in 2022. In the same sense, the department of Caazapá can be mentioned, which went from 4,800 hectares in 2021 to 36,599 in 2022 with almost 8% of the total area of cultivation.
At the end of June 2022, Soybean grain shipments suffered a 54% drop, in addition to a 42% drop in income, as a result of the drastic decrease in production due to adverse weather conditions, according to the Foreign Trade report of the Paraguayan Chamber of Exporters and Traders of Cereals and Oilseeds (Capeco).
Until the sixth month of this year, Paraguay shipped 1,883,045 tons of Soybeans, that is, 2,190,196 tons less (54%) compared to the same period in 2021, when 4,073,241 tons were shipped. This drop in volume reflects the drastic drop in production recorded last season as a result of severe weather conditions. As per Agflow data, the country exported 61,730 tons of Soybeans to Russia and 12,208 tons of Soybeans to Vietnam in 2021-2022.
The USDA Forecast on Paraguay Soybeans
According to the USDA, in MY 2021/2022, sustained dry, hot weather substantially reduced Soybean yields to historic lows, with final production projected at 3.9 million tons. As a result, in MY 2021/2022 domestic processing is projected to fall to 1.8 million tons and exports to 2.27 million tons. Drought conditions also reduced the quality of the Soybeans causing difficulties for the processing sector.
However, the USDA has more optimistic view for the marketing year MY 2022/2023. The forecast shows Soybean production at 10 million tons on 3.45 million hectares as Paraguay rebounds to more normal conditions following a significant drought. MY 2022/23 exports are projected at 6 million tons.
The preparation of this article included public information such as https://capeco.org.py/
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