Argentina Soybean Market – 2022 Overview

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Jan 18, 2023 | Agricultural Markets

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How will Droughts affect Argentina’s Soybean Production in MY 2022/2023?

Argentina’s Soybean production reached 44 Mmt in MY 2021/2022, 40 Mmt were crushed to produce 8 Mmt of Soybean Oil and 31 Mmt of Soybean Meal. In MY 2022/2023, the USDA estimated a 7 Mmt YoY increase in Argentina’s Soybean production. However, because winter crops planted in late 2022 are still suffering from drought and insufficient rainfall, USDA’s Jan 12 update reduced the estimate to 46 Mmt for MY 2022/2023, 5 Mmt lower than the initial estimates despite the 0.4 Mha increase in the harvested area which partially offsets weather-related losses.

 Figure 1: Argentina Soybean, Soybean Oil, and Soybean Meal Production MY 2021/2022 and 2022/2023

 

Argentina Soybean, Soybean Oil, and Soybean Meal Production MY 2021/2022 and 2022/2023

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Argentina Soybean Exports and Derivatives Decreased in 2022 (YoY)

Argentina’s Soybean exports reached 4.8 Mmt in 2022, 0.9 Mmt less than the previous year. Yet, Argentina’s Soybean production is mainly for crushing. Soybean Meal exports reached 32 Mmt in 2022, and Soybean Oil reached 6.6 Mmt, 6 Mmt and 1.5 Mmt lower YoY, respectively. Inflation and the war in Ukraine have led Argentina to limit food exports to prevent domestic price spikes. Thus, the country reduced Soybean exports through taxes in 2022. However, the Soy dollar program undertaken by Argentina in September was beneficial for farmers and the local currency exchange rate, so Argentina began the second phase in December 2022.


Figure 2: Argentina’s Soybean, Soybean Meal and Soybean Exports (Jan – Dec 2022)

Argentina’s Soybean, Soybean Meal and Soybean Exports (Jan - Dec 2022)

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What Are the Leading Markets for Argentina’s Soybean Exports?

Argentina’s Soybean major destination is China, reaching 4.4 Mmt in 2022 (+91% of total Soybean exports), 0.3 Mmt higher YoY. The primary destination for Soybean Meal in 2021 was Indonesia, with 4.3 Mmt, followed by Vietnam, with 3.8 Mmt. In 2022 Vietnam became the top destination for Argentina’s Soybean Meal, despite a 0. 2 Mmt decline YoY, and Indonesia reduced its Soybean Meal imports from Argentina by 1.4 Mmt to become the second destination in 2022. Meanwhile, India remains the top destination for Soybean Oil in 2022, despite the 0.5 Mmt YoY drop. How did Argentina’s Soybeans prices occur in 2022?

Figure 3: Argentina’s 5 Top Soybean Meal and Soybean Oil destinations Jan-Dec 2022

Argentina’s 5 Top Soybean Meal and Soybean Oil destinations Jan-Dec 2022

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Argentina’s Soybean Oil FOB Prices Fell in Q4 2022

Argentina’s Soybean maximum FOB price over the past two years was USD 710/mt, reached in March 2022, USD 169/mt higher YoY on average. Afterwards, prices gradually declined to a low of USD 562/mt in Oct. Soybean Oil prices increased in early 2022 to a maximum value of USD 1940/mt in Apr, USD 596/mt higher YoY, they declined to a low of USD 1065 /mt in Sep. Soybean Oil prices continue to decline, with an average FOB price of USD 1223/mt in Dec 2022, USD 105/mt lower YoY. While Argentina’s FOB Soybean Oil prices are declining YoY at the end of 2022, Soybean and Soybean Meal prices continue to increase, with USD 55/mt and USD 121/mt higher YoY in Dec, respectively.


Figure 4: 
Argentina’s Soybean, Soybean Meal and Soybean Oil FOB prices from Jan 2021 to Dec 2022

 

 

Argentina’s Soybean, Soybean Meal and Soybean Oil FOB prices from Jan 2021 to Dec 2022

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In a Nutshell

Argentina is the world’s third-largest exporter of Soybeans, mainly Soybean Oil and Meal. However, La Nina continues affecting production in MY 2022/2023, and the USDA estimates a larger YoY decline in production than previously expected.

Argentina exports Soybean mainly to China, Soybean Meal to Vietnam, and Soybean Oil to India. Yet overall exports declined YoY in 2022 as the government limited exports through taxation to reduce inflation. 

On the other hand, Brazil is a major exporter of Soybeans, and CONAB estimates that Brazil will increase its Soybean production by 28 Mmt YoY. How will Brazilian Soybean export prices affect Argentina’s exports in 2023?