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Brazil must supply half of the soybeans that Argentina will even import to keep the operations of its industrial park active, in the face of a historic drought that devastated the 2022/23 harvest in the country, which is normally the largest exporter of oil and meal in the country. oilseed, according to analysts interviewed by Reuters.
Faced with an Argentine harvest estimated by the market at around 25 million tons, compared to 42 million last season, the neighboring country will be able to import up to 10 million tons of soybeans, or more than double the volume acquired in previous years, when the origin was mainly Paraguay.
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Counting on a record harvest, Brazil could increase shipments to Argentina by at least ten times, said the head of Latam Grains at hEDGEpoint Global Markets, Sol Arcidiacono, who operates in Rosário, the main Argentine production center for bran and oil. soy.
She recalled that the annual average of soybean shipments from Brazil to Argentina would normally be 300 thousand tons, but in 2023 Brazilians will be able to supply at least 3 million tons, as Paraguay would not be able to supply the volumes additional resources needed by Argentines.
“(There is) a chance of reaching 5 million tons if international soybean meal prices pay – and I believe they will –, as the supply of Argentine soybean meal is difficult to replace,” said Arcidiacono.
The expert highlighted that, in addition to the country facing one of the worst droughts in 100 years, which included the oilseed harvest at 45% in relation to initial expectations, popularity among Argentines is the lowest in 20 years.
“They are holding soybeans until harvest, without pricing,” she said, highlighting that this would be another of the factors that also boosted guidance to record levels this season.
According to Arcidiacono, the price of grain has been a problem at the time of sale, both due to the lack of references and the negative crushing margins, as supply is still low in the neighboring country, also considering that the harvest is just beginning and as of Brazil are still relatively small.
“Brazil, if it confirms a harvest exceeding 152 million tons, would have the capacity to export up to 97 million tons (to all destinations) and would be able to meet practically all of Argentina’s import demand”, said the director of consultancy Cogo, Carlos Cogo.
He agrees that Brazil could export 5 million tons of soybeans to Argentina, or more, especially if China – the biggest buyer of Brazilian grain – comes with a smaller appetite.
Cogo highlighted that Paraguay is also an important supplier, but has limited supply, given that its soybean harvest is estimated at around 8.8 million tons. The US Department of Agriculture (USDA) estimates a 2022/23 Paraguayan harvest at 10 million tons.
Bolivia and Uruguay will also be supplier options, even if in smaller volumes, added Safras & Mercado analyst Luiz Fernando Roque.
Roque indicated that Brazil shipped almost 230 thousand tons of oilseed to Argentineans in the first two months of 2023, compared to only 167 kilos in the same period last year, which indicates that volumes will increase throughout the year.
“This year, imports from Argentina should jump to 10 million tons, because the losses are very large, and even then they will have to reduce crushing.”
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Arcidiacono, from hEDGEpoint, highlighted that the increase in interest in imports is expected to continue in the last quarters of the year, amid the country's election increasing political and macroeconomic outputs, and very small transit stocks due to the smallest harvest in two decades.
“The basic (premium) and prices will be supported at this time of year,” he said.
A market source stated, on condition of anonymity, that there are reports of shipments of Brazilian soybeans leaving for Argentina from Porto Murtinho, in Mato Grosso do Sul, and even Santarém, in Pará.
“I understand that the price in Brazil fell so much with the record harvest, that (Argentinean) imports even from Arco Norte terminals became viable,” said the source.
The interlocutor recalled that, in addition to historical production, sales by Brazilian farmers have been good in recent weeks, with production lacking space to store the grains.
“The soybean base in Brazil remains at a discount compared to the Chicago Stock Exchange price”, he emphasized.
Agrinvest soybean analyst Eduardo Vanin said in a report that if premiums in Brazil continue to fall, the account will remain viable for foreign buyers, which could increase the potential for Brazilian soybeans to be rewarded by Argentines, and intensify competition with Paraguayan suppliers.
According to him, cereal producers in Mato Grosso do Sul are estimating a record export of 1.6 million tons of soybeans to Argentina via Porto Murtinho and the dry border to Concepción, in Paraguay.
It is possible that there will be shipments through other ports, but the options are limited, as the ships going to Argentina would be smaller and negotiations avoid ports with long waiting times to avoid paying “demurrage”, which is a penalty for delays in boarding. , said Vanin.
Source: Nayara Figueiredo and Ana Mano | Notícias Agrícolas
