After 25 years, Argentina lost its leadership as the largest exporter of soybean meal in the world.
Due to the impact of the drought and a permanent reduction in the production of grains and derivatives, Brazil leads in terms of exports worldwide. Argentina will close the year with an export level of 21.1 million tons, 21 percent lower than the previous cycle, according to projections from the Rosario Stock Exchange (BCR).
Argentina is the fourth-largest producer in the world, while only China, the United States, and Brazil surpass our country, while the fifth place is occupied by the European Union.
According to data from the United States Department of Agriculture (USDA), it is estimated that these five main producers concentrate more than 80% of the amount of soybean meal produced worldwide. However, since little is consumed domestically, in contrast to the rest of the main producers, Argentina has a very large exportable balance and has been the leading exporter of the product since 1997.
However, while the impact of the drought is undeniable, there is also an impact on production growth that is weaker than that of other producers. “If we analyze the participation of Argentina in global production, it is observed that while in the campaign of 2010/11 17% of the production was located in our country, this percentage decreased to 13% for the campaign of 2020/21 and to 10% for the current period,” highlights the BCR report, which will also show that global production has increased at a faster pace than domestic production.
While domestic production totaled 30.3 Mt for the 2021/22 campaign, this volume dropped by 22% to reach just 23.6 Mt in the current cycle, ranking as the lowest production volume since 2004/05. However, the expected recovery of the oilseed harvest for the next campaign will generate a growth in local production of around 14%. In contrast, Brazil significantly increased its production after obtaining a record harvest of oilseed.
According to BCR estimates, Argentina’s exports will be 21.1 million tons this season, while Brazil will sell 21.5 million tons abroad.
Regarding global purchases, the main importers of soybean meal currently include the European Union, Indonesia, and Vietnam, which account for more than 42% of the purchase volume.
However, it is important to highlight that the European Union has shown a decrease in its level of demand over the years due to a decrease in domestic consumption, while the number of purchases in Indonesia and Vietnam shows an increasing trend.
However, a significant level of demand is expected from the countries of the old continent for the next campaign, especially to satisfy the still high domestic consumption of 26.9 Mt that cannot be covered by local production.
Finally, according to the current global supply and demand forecasts of World Oil, oilmeal production surpluses are expected for the 2023–24 campaign, leading to an increase in stocks that will affect prices.
Regarding soybean meal, it should be noted that the prices during the current campaign remain supported by the reduction in production and exports in our country, which cannot be compensated by other supplier countries, and it is expected that the support of those prices will continue until December of this year. However, starting in early 2024, global production and export supplies of soybean meal will increase significantly, so prices are expected to drop significantly between January and June 2024, decreasing between 24% and 29%.