The government in Argentina has suspended the export registration of soy meal and soy oil, it announced on Sunday 13 March. The South American country is the world's largest exporter of both products. The US soybean meal quoted skyrocketed in overnight trading.
The May contract for soymeal on the CBoT has now risen by 2,3% in overnight trading. The soybean oil contract fell 0,5% and soybean prices rose 0,84%. The price of soy meal – the most important raw material for many animal feeds – is now at its highest level in seven years.
Global player
Brazil is known as the largest exporter of soybeans, but it is Argentina that exports the most soymeal and oil worldwide. Of these, it controls 41% and 48% of the world trade volume respectively. The soy harvest has not yet started in the country. The measure therefore does not affect the physical export of these products. According to export data, 5 million tons of soy products have now been registered for export for the new 2021-22 season, government data shows.
Increase in export tax
Analysts expect that a tax increase will follow shortly after the end of export registration. It now stands at 31%. According to the Argentinian Association for Processors and Exporters (Ciara), the government plans to increase this rate by double digits. Something that the organization criticizes because it does not leave the position of the country untouched. Global buyers have no choice but to buy more soy products in Brazil and the US.
Many soy products from Argentina are used, especially in Southeast Asia. The Netherlands imports mainly soybeans and soy products from Brazil (58%) and the US (30%). Yet the consequences of the Argentinian decision are irrevocably felt here too because they are reflected in the world market and therefore also in prices.
Less corn and soy
Argentina expects a soy harvest of around 40 million tons this year compared to 45 million tons last year. Drought has severely limited yield expectations for soy and grain corn. The country's winter wheat harvest - which has already been harvested earlier - did reach a record: 22,1 million tons versus 17 million tons last season.
Fertilizer shortage threatens Brazil
Brazil, the largest soy producer, was also in the news. The country is the largest importer of fertilizer from Russia and this source has now literally dried up due to the export ban. Last week, the Ministry of Economy presented the 'national fertilizer plan' that should reduce dependence on imported fertilizer. No less than thirty years will be allocated for this. By 2052, the import level must be reduced from 85% to 50% to 55%. In the shorter term – by 2030 – the country should be able to produce 1,9 million tons of nitrogen. Now it is 225.000 tons. Phosphate production increases from 2 million tons to 4,2 million tons and potash from 250.000 tons to 2 million tons.
If Brazilian farmers cannot obtain sufficient fertilizer for their soy and corn, this will clearly have an impact on the coming harvests. All soy has now been harvested and the country is now preparing for safrinha corn. This is a second crop that is sown after soybeans.