U.S. Soybeans Find Unlikely Home in Argentina

Rob Hatchett

Rob Hatchett

Doane Advisory Services

The shortfall in soybean production in Argentina realized last spring, in addition to the changing dynamics in the world soybean trade in the last half of 2018, have resulted in more U.S. soybeans arriving in Argentina this fall. The U.S. Department of Agriculture (USDA) estimates that Argentina harvested just 37.8 million metric tons (MMT) in 2017/18 after collecting 55.0 MMT the previous harvest. This was a disastrous crop, losing nearly one-third of the previous year’s production.

For years, the Argentine government has relied on export taxes on soybean and soybean products to help provide essential funding. Recent changes in the tax structure have evened the tax rates, which once saw rates applied on soybean oil and soybean meal shipments, to a flat rate of 18 percent. This makes it less costly to ship soybeans relative to soy products and, as a result, more soybeans are leaving the shores to be crushed elsewhere. With nearly all of the soybeans in South America flowing into Asia, there has been a shortfall in the domestic crushing markets to meet the nation’s own oil and meal consumption needs, which mean U.S. soybeans to the rescue.

According to numbers compiled by the attaché office in Buenos Aires, Argentina has imported more than 3.5 MMT of soybeans through September. This is an increase of 135 percent from the same period last year. Of the total, 450 thousand metric tons (TMT) were from the U.S., while the remainder came from neighboring South American countries. Weekly export data for the 2018/19 marketing year, which began in September, published by USDA’s Foreign Agricultural Service shows that accumulated exports have reached 1.215 MMT as of late November. The latest data shows that nearly 400 TMT remains to be shipped in the current marketing year and fresh sales are expected to come as the market approaches new-crop harvest next spring. It takes a little over a month for a cargo to travel from the U.S. Gulf to arrive in Buenos Aires and with considerable harvest progress about four months away, it stands that the U.S. should continue to supply Argentina with fresh shipments of new-crop U.S. soybeans.