The special “Soybean USD Exchange Rate” boost truck deliveries to Rosario by more than double

The special “Soybean USD Exchange Rate” boost truck deliveries to Rosario by more than double

Soybean delivery at Upriver last week grew by 120% over the average of the past three months. SB imports continue at their lowest level in five years. While the drought surprises in the United States, funds are taking positions.

As September goes by, the Export Increase Program is showing more and more impact on soybean trades and logistics in Argentina. By the end of the third week of the program, high levels of soybean sales are already substantially affecting the transportation of local grains, thanks to the exceptional exchange rate to be from September 5 to September 30, of this year.

Last week more than 26,000 truckloads of soybeans arrived at Upriver port area—a weekly truck-arrival level not seen in the month of September since 2015. Not only that, but soybean cargos going to crush plants and Rosario port area are close to the volumes usually seen during full harvest. The entry of soybean trucks to Gran Rosario in the first week of the program was 48% higher than the last three-month weekly average. In addition, the volume of soybeans arriving at Upriver last week was 120% higher than the same average for that period. Furthermore, if we consider the average of 2021’s third quarter, the weekly soybean intake of 2022 is 14% higher for the first week and 70% higher for the second week of the so-called “Soybean Dollar”. 

As for the domestic market, the commercial flow continued to be directed at soybeans. The Export Incentive Program has effectively boosted soybean business, which according to SIO Granos accumulated 9.8 million tons, between new contracts and fixations of contracts previously delivered. However, some buyers have begun to warn that due to administrative issues they would accept settlements until the beginning of next week, so it is possible that volumes may slow down during the last week of the program. 

As for trades in the US market, quotations this week were influenced by the restrictive policy of the FED, which continues to raise interest rates, at the same time that the economic uncertainty in the Black Sea grows and recession risks are heightened, all of which determined that Chicago prices reacted with a different attitude, falling at the beginning of the week yet gaining ground by the end of the week; totaling 270 USD/MT for corn and 535 UDS/MT for soybeans.

Soybean imports continue at their lowest level in five years

This season began with a significant drop in the Paraguayan soybean harvest, with a decrease close to 60%. Thus, in just one year, Paraguay went from harvesting 9.9 Mil MT to 4.2 Mil MT of soybeans. The landlocked SB producer is an important provider which expands the local soybean supply and improves protein content level of Argentine crush industrial. Its drop in production inescapably had an impact in Argentina, causing a lower soybean supply, which went from 3.6 Mil MT to barely over 1.5 Mil MT in the first eight months of the year.

In this context of sharp production declines in Paraguay, the decrease was partially offset by the continuous supply of soybeans from Bolivia and Uruguay. So far this year, these two countries have contributed more than one million tons for soybean for crush. The contribution of Uruguay, an unusual origin for soybean imports to Argentina, stands out. However, the drought in Paraguay had a stronger overall impact, causing soybean imports to fall by more than 26% on a year-on-year basis.


While the drought surprises in the United States, funds are taking positions

With the 2022/23 U.S. grain season barely kicking-off, the USDA surprised one and all in its latest monthly report with higher-than-expected cuts in soybean and corn yields. In line with this, the current week began with 1% cuts in the Good-to-Excellent condition of U.S. coarse grains. In this regard, corn condition is 7% below last year, while soybean is 1% below 2021 levels. Consequently, investment funds are beginning to take note of these threats to U.S. coarse grains production. After the USDA’s monthly WASDE report, mutual fund net positioning rose 6.3% in corn futures and 12.5% in soybeans in just one week. The strong rallies the week before last and on Tuesday of last week in Chicago are largely explained by the movements of these funds, reacting to the increasing pessimistic production expectations.



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