Argentina, Brazil or USA: Where will buyers go to get soy in this new…

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Weekly sales for North American exports came weak in the release of the USDA (United States Department of Agriculture) this Thursday (22). The numbers came below expectations for both soybeans, derivatives and corn. In the case of cereal, 2022/23 sales are only half the volume of the same period of the previous commercial year.

In the week ended September 15, the US sold 446,400 tonnes of soybeans, while market projections ranged from 500,000 to 1 million tonnes, with Egypt being the biggest buyer of the American oilseed. China was responsible for purchases of 152.2 thousand tons. However, the report still indicates that there are 55 thousand exchanges of ‘unknown destinations’. At the same time, the report also brought the cancellation by unknown destinations of 184.7 thousand tons.

The demand for North American soybeans is more contained at the moment, since Argentina is very competitive due to the stimulus of the ‘soy dollar’. The measure of the Argentine government that guarantees a specific exchange rate for the commercialization of the commodity has promoted, since the beginning of this month, a significant acceleration of sales, which had been quite blocked in recent months, precisely because of the little advantage in the sale of grains against the weight so undervalued.

Estimates from the Rosario Commerce Exchange indicate that, from September 5th to 19th, 9.3 million tons of soybeans have already been traded. Of this total, according to information gathered by the local portal Infocampo, 6.2 million tons of business are new business and 2.6 million are just price-fixing operations for volumes that had already been committed.

Soybean Sales in Argentina - BCR
Chart: Rosario Stock Exchange

Thus, this intensified competitiveness of Argentine soybeans in relation to its other competitors is reflected, therefore, in the North American numbers. And it should continue to have an effect, as explained by market analyst at Agrinvest Commodities, Eduardo Vanin. “The next few weeks should be very weak. Argentina is very cheap to ship in October, and China has bought a lot of boats in the last two weeks,” he says.

Vanin complements by warning about how much Argentina could take from the US soy program going forward.

“Remembering that the American program started the season at 24.4 million tons, the second strongest in history. If Brazil has any production or logistics problems in February, the American program could reach close to 50 million at the turn of the second half of the season, in early March, which would put pressure on the USDA for upward revisions in demand,” he explains.

The analysis by Aaron Edwards, market consultant at Roach Ag Marketing, is similar and also raises the question of how long this Argentine presence in the market still has. The important thing will be to understand if the space that was reached this month is something specific, short-term, or if it is something that can be extended.

“Today I believe it is short-term news, which will not affect the long-term supply and demand relationship,” he says. “The buyer wants to buy from Argentina while it’s available and then fill it with US soybeans until the new Brazilian crop arrives. For me, it’s another adjustment in this sense. And if that’s the case, the US should start exporting again. between October and December, until the Brazilian harvest arrives. So, US exports will still be strong, it’s just having a slight decline now in the short term”, details Edwards.

And he also explains that, despite signaling a punctual impact, the movement deserves constant monitoring, as it may have some consequences for the three main global origins of the oilseed. The consultant also points out that buyers continue to consider who has the product available now, at what prices and under which logistical conditions are also more attractive.

“Argetina ‘won’ the September round, I imagine the US will gain space from October to December, and the first semester in Brazil, depending on when new crop soybeans start arriving, the country will gain a lot of space in exports. This is just fitting the export and not very different from the normal rhythm of soybean exports”, says the American consultant.

The big question about the supply and demand scenario, in Aaron Edwards’ analysis, is whether there will be demand in the current market for all this soybean at current price levels or the values ​​practiced now already compromise consumption.

“And my opinion is that we are not yet ‘destroying’ demands at these price levels, at least not significantly. This is positive for US exports, for Brazil, and while we have tight inventories this does not change. in terms of prices and when each one exports, but there will be demand for soybeans from Brazil and the United States”, he adds.

Thus, the next moment of greater attention will be a scenario of possible deceleration in demand, with higher inventories, which may be when exporters can start to compete more vehemently. “And this is not the picture today, in my opinion.”

About Abhishek Pratap

Food maven. Unapologetic travel fanatic. MCU's fan. Infuriatingly humble creator. Award-winning pop culture ninja.

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