Crushing industry increases its reliance on imported soybean

During the first two months of the year, Argentinean oilseed industry imported 364.000 metric tons of soybean, mainly from Paraguay. This represents a record volume, from 248.000 tons in 2017.

According to Ministry of Agroindustry oilseed industry crushed 5.11 MMT of soybean during January and February 2018, 9% below the 2017 same period.

“It happens due to a lack of raw material (beans)”, says a font in the industry. Is that the severe drought are affecting the volume of the harvest. The Bolsa de Cereales de Buenos Aires (Grain Stock Exchange) estimates that farmers will harvest 39.5 MMT of the oilseed, 15.5 MMT less than in 2016/17 season.

After their assumption, in December 2015, the Government of President Macri implemented a new policy in the Ag economy. He released the export tax to all the crops except to the soybean complex (beans, oil and meal). This provoked a switch from soybean acreage to corn. Meanwhile, in 2015/16 farmers grown 20.48 million hectares of soybean, in the 2017/18 season, the acreage was reduced to 16.50 million hectares, losing 4 million in just two years.

The production, that reached a peak of 61,4 MMT in 2014/15 season is dropping year after year as far as the present 40 MMT.

This situation is running the crushing industry to a large unused capacity. Imported soybean from Paraguay and Brazil could ease the problem, but, how many soybeans could provide Paraguay to the facilities on the Parana River? Its harvest rounds 10 MMT, 40% of which are crushing internally and other 60% exported as grain.

During 2017, Paraguay provided 1.84 MMT of soybean to crushing industry in Argentina. This is less than 20% of the shortage this year.

“It is to be expected that Argentina will reduce their soybean exports in favor of meal and oil this year”, says the industry font.