The soybean complex is set to double the country’s foreign exchange earnings next year

The soybean complex is set to double the country’s foreign exchange earnings next year

The rains have helped to recompose the humidity in the soil with a view to the new soybean season, which is progressing steadily towards April next year.

Good news for soybeans and awaiting higher revenues for the coming season

October has become a month of definitions for Argentinean crops. The long-awaited rains allowed the soil moisture profile to be restored in key regions, although more millimetres are still needed in western Buenos Aires and north-central Córdoba. This, combined with the largest sown area in six years, with 17.4 million hectares, allows for a projected soybean production of 50 million tonnes, two and a half times that of the previous cycle.

Adding the carry between seasons and the forecast of imports, the total supply of soya in Argentina is estimated at 58 million tonnes, in line with the average of the last ten seasons and 54% more than in 2022/23. It can be foreseen that the oil industry’s processing would grow to 39 million tonnes, an increase of close to 50% compared to the previous cycle.

In Argentina, 30% of the dollars that come in from exports come from the agricultural complex. For the current cycle, net exports from the soya complex are estimated at just USD 8 billion, the lowest value in almost 20 years, since the 2003/04 season. Meanwhile, for the new 2023/24 season, and as a result of the recomposition of production, net exports of soya beans and derived products are projected to bring in USD 18 billion, ten billion more than last season and above the average for the last five years, although still below the figures for 2020/21 and 2021/22.

The bulk of foreign sales revenues historically occur in the first two quarters of the season, which represent on average 61% of the value of exports. Thus, a normalization in foreign trade volumes could be expected from April next year.

The international market is closely following the South American situation

In anticipation of a record world production for the coming season, the adverse weather conditions in Brazil are alerting the market, imposing an upward trend on prices.

At this stage of the year, all eyes are on the progress of Brazilian sowing and local production projections. In the middle of 2023, record soybean production was projected for the 2023/24 cycle on Brazilian soil. Estimates are still around comfortable numbers, and depending on the source consulted, between 160 and 162 million tonnes of soybeans are forecast. However, the climatic vicissitudes present during September and most of October have given an element of uncertainty.

Adverse weather conditions in the southern and central-western regions of the neighbouring country have delayed sowing progress, while the northern region remains under drought conditions. Local analysts warn that it is still too early to draw conclusions and modify estimates, but that, if the current weather conditions with lack of rain and high temperatures continue, yields and, consequently, production could be affected.

The US corn harvest is progressing at a good pace, but Brazil would repeat the first place in exports

In the United States, the corn harvest is progressing faster than average, with 81% of the target area already harvested at this stage of the year, according to the USDA reported this week. In addition, the agency expects US production for the coming season to be among the top three best in its history. The 2016/17 season, with 384.8 million tonnes, is still positioned as the highest, followed by 2021/22 with 2 million tonnes less. Faced with such a large production, the market has been positioning itself for the coming cycle and in Chicago there is a notable downward trend in prices.

The dynamics of maize prices have been affected in recent months by the uncertainty surrounding the Black Sea region. At the end of July, the breakdown of the grain insurance corridor agreement led to a generalized rise in commodities, but after the storm, prices in Chicago fell sharply, accumulating a loss of 20% in three and a half months.

During the week, in view of the publication of the USDA’s world supply and demand report, expectations were in favour of a small increase in yields and consequent US corn production. With the forecast of a more ample supply in the US, and an appeased demand for the American export market (mainly due to China’s intention to diversify the range of suppliers by incorporating Brazil and Argentina to the table), the December contract of the cereal felt the rigour of the fundamentals, trading around minimums that were not seen since September.

If the trend continues, and according to USDA projections, Brazil could once again take the place of the United States as the world’s main corn exporter. Already for this season that we are leaving behind, the neighbouring country would have exported 14 million tonnes more than the Americans.


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