Argentina’s soybean exports to fall by at least 25% on drought

27 Feb 2018 | Andy Allan

Exports of soybeans from Argentina, the world’s third biggest exporter, are expected to take a hit of at least 25% due to the poor state of the crop, market sources said Tuesday.

Exports, which were estimated at around 8.5 million mt just a few months ago, will be at best 6.5 million mt and could go lower should much needed rain not arrive in force over the next two weeks.

“The estimate for 2017/18 [exports] is 6.5 million mt and it can even be something less,” said Eugenio Irazuegui, an analyst with Argentina-based brokerage Zeni.

However, other analysts are expecting that export figure to go lower.

“I think that Argentina is going to export very few beans. The industry is going to take the whole offer," said Pablo Pochettino, a Rosario-based grain broker with brokerage Intagro.

"I think it will be a year similar to the 2008/09 drought where it was difficult for the export sector… they exported only 5.6 million mt versus 13.8 million mt in 2007/08,” he added.


A lack of rain at key growing periods has cut the planted area by 4.2% to 18 million hectares and seen yields fall to 2.68 mt per hectare – their lowest in five years, according to data from the Rosario Board of Trade.

As a result, Argentina’s soybean crop has been continuously revised down by public and private research bodies, with Rosario and the Buenos Aires Grain Exchanges slashing their production estimates last week to 46.5 million mt and 47 million mt, respectively.

That compares with estimates from the USDA, which projected at the start of the year a crop of 56 million mt and exports at 8.5 million mt.

Should the crop fall to 46 million mt, the crop loss will reach least 10 million mt from initial expectations, equating to a 3% cut in global supply.

And more analysts see further downside after the Buenos Aires Grain Exchange said last week half the crop was in poor condition.


With weather forecasts calling for erratic rain in only 30% of the country, according to Futures International, further revisions may occur and an online poll of Argentine producers claimed that 50% of the 275 respondents believe the soybean crop is now below 43 million mt.

Regardless, the final export number is unlikely to dip below 3.7 million mt as that is what has already been sold to the export sector, according to figures from Argentina’s agriculture ministry.

“I’d be surprised if exports are higher than 4 million mt if these [lower estimates of] production levels are true,” said one market source that declined to be named.

And with soymeal prices surging and crushers likely to take as many beans as they can, it will likely be the ending stocks that may take a hit, with the Rosario Board of Trade estimating that they will fall to 5 million mt.

“After four consecutive years with final stocks of soybeans in Argentina at or above 10 Mt, a brutal drought will cut inventories by at least half,” Emilce Terre and Franco Ramseyer wrote in a paper on Friday.