Argentina soybean crushers are likely to increase soybean meal exports in the coming months as the domestic soybean market appears well supplied and prices have strengthened.
Crushers increased their reliance on imported soybeans in June to maintain elevated meal production levels, increasing imports from the previous year by 41pc to reach 895,000 metric tonnes (t).
Farmer reluctance to sell this year's crop likely supported imports, with deliveries from domestic producers falling by 3.1pc from the previous year to 3.32mn t in June. But farmers still have an estimated 29.2mn t of the current soybean crop to sell at the start of July, up by 21pc from the previous year, due to their slower selling pace.
Even with increased soybean crushing in June, combined imports and domestic deliveries were enough to push soybean stocks held by crusher on 1 July up by 17pc from a year early to 4.11mn t, the most volume held by crushers ever. Combining the unsold volumes still held by farmers and the supply in the crushers' hands, Argentina's soybean crushing industry had access to 33.3mn t of soybeans at the start of July, a 21pc — 5.68mn t — increase from the start of July last year.
Crushers may be increasing soybean meal production this month, with farmers selling 1.27mn t of this year's harvest to domestic users during the first two weeks of July, up by 20pc from the same period last year.
And volumes registered for export increased as well, with 3.53mn t booked since the start of July for shipping in the months ahead, eclipsing the 727,000t booked during the same period last year. To meet these obligations, crushers will need to expand on the 764,000t of soybean meal they held in storage at the start of July, which was a 15pc reduction from the volume they held on 1 July last year.
Higher prices should motivate crushers to increase activity. Since the start of July, basis for September loaded soybean meal fob upriver has increased by $3.50/short ton (st). At the same time, the September futures contract on the Chicago Board of Trade increased by $15/st to put the Argus assessed value at $322/st as of 27 July.
All signals indicate that Argentina's oilseed processors have increased crushing this month and could have a more active August — when crushing volumes typically slow — as prices have become more supportive. And Argentina's market should be well supplied to meet the increasing crushing demand.
See Argentina soy products supply and usage data for more details.
