Brazil may triple soybean exports to Argentina
Argentina stepped up purchases of Brazilian soybeans in January and may import up to 2mn metric tonnes (t) from its neighbor in 2023 as it faces a crop shortfall and lower domestic supply.
Market participants from both countries say that in the first weeks of January, 300,000t-400,000t of Brazilian soybeans were traded to Argentina for shipment in February-March. They estimate that 1mn t of the oilseed have been negotiated for the year and that shipments could reach 2mn t in 2023. The most soybeans Brazil has exported to Argentina was 657,000t in 2018, but shipments have not exceeded 300,000t in recent years.
The increase in shipments was driven by a crop failure in drought-stricken Argentina. Soybean production is expected to reach 41mn t in the 2022-23 marketing year, down by 7mn t from the previous forecast, according to Buenos Aires Grain Exchange (Bage)'s last estimate. That is still much higher than the Rosario Board of Trade (BCR)'s forecast, which was recently trimmed to 37mn t from a previous 49mn t.
Argentina has a robust soybean meal and oil industry. Therefore, crushers increase grain imports from neighboring countries, especially Paraguay, when national production dips.
Taking the scenic route
Brazilian soybeans usually reach Argentina by river, with shipments dispatched from Porto Murtinho, in Mato Grosso do Sul state.
Argentina also borders Rio Grande do Sul state, one of Brazil's largest soybean producers. But both states still did not have soybeans available for export in January because of their crop calendars.
Therefore, atypical logistics had to be adopted to guarantee a soybean supply to Argentinians. Most of the deals closed in January for shipment until March used Para state's Santarem port, in Brazil's northern region, about 4,500km (2,800 miles) from Buenos Aires. Exporters can pull soybeans that are harvested between the end of December and the beginning of January — especially from Mato Grosso state — through the Northern Arc, Brazil's north Atlantic ports.
Crushing margins in Argentina from now on will define import volumes from Brazil, since buying the oilseed from the neighbouring country to then crush it and continue exporting soybean meal and oil globally may be economically advantageous, says Daniele Siqueira, an analyst at consulting firm AgRural. The Argentinian crop is planted in October and November and harvested in March and April, so future weather patterns can still affect production — the situation may normalize or worsen if dry weather continues to prevail.
Chinese demand has also been weaker, while Brazil's soy output is expected to reach a new record — above 152 mn t — so the country should have more soybeans available to export to Argentina. The industry would have lost $75/t if it chose to buy Argentinian soybeans instead of the Brazilian product in mid-January, when soybean export deals from Santarem were reported, according to Siqueira.
At least three trading companies have closed deals to export soybeans to Argentina through Santarem, market participants confirmed to Argus. The companies did not reveal the price that was paid in these transactions, but it is estimated that at the peak of the industry's need — in mid-January — deals went out at a premium of 110¢/bushel over the Chicago Board of Trade's March contract, which at that time represented around $590/t.
Argentinian buyers were still inquiring about product from northern Brazilian ports last week, but the movement has slowed in the latter half of the month. Soy exports through Porto Murtinho may increase as the harvest advances in Brazil's central-west. The route could ship 600,000t this year, sources told Argus.
Imports to meet contracts
Argentinian crushers are purchasing feedstock from both Brazilian and Paraguayan suppliers while its farmers are holding back soybean trades since the country's soy dollar policy ended in late December, sources told Argus.
Several soybean oil exporters who had shipments scheduled for February and March will need to import the grain.
As the Paraguayan harvest starts in mid-February, a window has opened for Brazilian soybean in Argentina, where trading companies are seeking to meet their contract obligations. The country is a global leader in soyoil sales and an important shipper of biodiesel to the EU.
In order for Argentinian exporters to fulfill their contracts, Brazilian soybeans must arrive at the Rosario ports no later than in the first half of February. At least three ships have not been loaded or are yet to leave Santarem, which has brought concerns to Argentinian soyoil producers.
A possible delay in unhedged shipments increases risk for buyers as the economic outlook can change by the time soybeans arrive at the destination. Extended travel times can erode the cargo's competitiveness with Paraguayan shipments.
"For Argentinians, it is better to buy soybeans from Paraguay," said Anilbagani Bagani, commodity research head at Sunvin Group. "It is much cheaper than Brazilian product and it is transported by the Parana river." Freight from the Northern Arc is more expensive compared with Paraguay.
Related news posts
Brazil hydroelectric dam bursts under record rains
Brazil hydroelectric dam bursts under record rains
Sao Paulo, 3 May (Argus) — Brazilian power generation company Companhia Energetica Rio das Antas (Ceran) found a partial rupture in its 100MW 14 de Julho hydroelectric plant following record precipitation in Rio Grande do Sul state. Flooding from the record rains has left 37 dead and forced more than 23,000 people out of their homes, causing widespread damage across the state, including washed out bridges and roads across several cities. Ceron reported that the dam of the hydroelectric plant on the Antas River suffered a rupture under the heavy rains and the company implemented an emergency evacuation plan on 1 May. Ceron's 130MW Monte Claro and 130MW Castro Alves plants are under intense monitoring, the company said in a statement. Rio Grande do Sul state governor Eduardo Leite declared a state of emergency and the federal government promised to release funding for emergency disaster relief. Leite said the flooding will likely go down as the worst environmental disaster in the state's history. Brazil's southernmost state along the border with Argentina has been punished by record precipitation over the past year owing to the effects of the strong El Nino weather phenomenon, according to Rio Grande do Sul-based weather forecaster MetSul Meteorologia. Brazilian power company CPFL Energia controls Ceran with a 65pc equity stake. Energy company CEEE-GT, which is owned by steel manufacturer CSN, owns another 30pc, and Norway's Statkraft owns the remaining 5pc. The state had declared a state of emergency as recently as September 2023 because of unusually heavy rains that resulted in the death of more than 30 people. Weather forecasters expect El Nino conditions to abate in the coming months over the eastern Pacific. Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Canada rail strike to affect grains, industry says
Canada rail strike to affect grains, industry says
London, 3 May (Argus) — Strike action by workers at Canadian National Railway and Canadian Pacific Kansas City could have significant repercussions for the country's grains market, according to industry body the Grain Growers of Canada (GGC). Members of the Teamsters Canada Rail Conference authorised a strike on 1 May. Industrial action at the two major Canadian railroad companies could begin as early as 22 May. The parties have now entered a mandatory period of mediation. The GGC has called for a resolution to be reached in this period that safeguards Canada's grains supply chain. Canadian grain trade operations are particularly dependant on rail logistics, with the vast majority of grain from producing regions transported to ports by rail — 94pc of all Canadian grain is transported by rail, according to the GGC. Disrupted logistics could limit grain storage capacity, which could result in less stock available for export and curb selling by farmers. This could cause importers to seek alternative grains origins. Members are "worried about the impact a strike would have [...] on Canada's reputation as a reliable supplier", the GGC said. "Consecutive supply chain disruptions have already strained our relationships with international buyers. Another stoppage could drive them to seek other markets, affecting us in the long term," GGC's second vice chair Brendan Phillips said. In the high-protein wheat market — one of Canada's major agricultural exports — buyers may turn to US-origin Hard Red Spring wheat as an alternative, traders in both regions told Argus . This could have a significant effect on the market. "In June 2023, Canada exported over 2.6mn t of grain, highlighting the potential economic loss of over $35mn for each day in June that a strike persists," the GGC said. That said, wheat exports accounted for around 1.7mn t of this volume, Argus -aggregated data show. Canada's wheat exports have increased significantly ahead of the long-term average pace in 2024, surpassing 2023 levels by 710,000t in the week to 28 April. Remaining stocks of the 2023-24 wheat crop are low, according to market participants, and with the winter wheat harvest not scheduled to begin until July, low stocks could shelter Canada's wheat market to some extent. By Megan Evans Canadian wheat (excl. durum) exports mn t Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Canadian rail workers vote to launch strike: Correction
Canadian rail workers vote to launch strike: Correction
Corrects movement of grain loadings from a year earlier in final paragraph. Washington, 2 May (Argus) — Workers at the two major Canadian railroads could go on strike as soon as 22 May now that members of the Teamsters Canada Rail Conference (TCRC) have authorized a strike, potentially causing widespread disruption to shipments of commodities such as crude, coal and grain. A strike could disrupt rail traffic not only in Canada but also in the US and Mexico because trains would not be able to leave, nor could shipments enter into Canada. This labor action could be far more impactful than recent strikes because it would affect Canadian National (CN) and Canadian Pacific Kansas City (CPKC) at the same time. Union members at Canadian railroads have gone on strike individually in the past, which has left one of the two carriers to continue operating and handle some of their competitor's freight. But TCRC members completed a vote yesterday about whether to initiate a strike action at each carrier. The union represents about 9,300 workers employed at the two railroads. Roughly 98pc of union members that participated voted in favor of a strike beginning as early as 22 May, the union said. The union said talks are at an impasse. "After six months of negotiations with both companies, we are no closer to reaching a settlement than when we first began, TCRC president Paul Boucher said. Boucher warned that "a simultaneous work stoppage at both CN and CPKC would disrupt supply chains on a scale Canada has likely never experienced." He added that the union does not want to provoke a rail crisis and wants to avoid a work stoppage. The union has argued that the railroads' proposals would harm safety practices. It has also sought an improved work-life balance. But CN and CPKC said the union continues to reject their proposals. CPKC "is committed to negotiating in good faith and responding to our employees' desire for higher pay and improved work-life balance, while respecting the best interests of all our railroaders, their families, our customers, and the North American economy." CN said it wants a contract that addresses the work life balance and productivity, benefiting the company and employees. But even when CN "proposed a solution that would not touch duty-rest rules, the union has rejected it," the railroad said. Canadian commodity volume has fallen this year with only rail shipments of chemicals, petroleum and petroleum products, and non-metallic minerals rising, Association of American Railroads (AAR) data show. Volume data includes cars loaded in the US by Canadian carriers. Coal traffic dropped by 11pc during the 17 weeks ended on 27 April compared with a year earlier, AAR data show. Loadings of motor vehicles and parts have fallen by 5.2pc. CN and CPKC grain loadings fell by 4.3pc from a year earlier, while shipment of farm products and food fell by 9.3pc. By Abby Caplan Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
India’s Coromandel to build Kakinada fertilizer complex
India’s Coromandel to build Kakinada fertilizer complex
Singapore, 2 May (Argus) — Indian fertilizer producer Coromandel International will build a 650 t/d phosphoric acid-sulphuric acid complex facility in Kakinada, Andhra Pradesh with an investment of approximately 10bn rupees ($120mn). The project is expected to commission in two years' time, CIL's executive chairman Arun Alagappan said on 26 April. Phosphoric acid and sulphuric acid are used in the production of phosphate fertilizers like DAP and NPKs. CIL's new phosphoric acid facility aims to provide for its fertilizer manufacturing and to replace more than 50pc of the plant's import requirements. It also plans to build a 1,800 t/d sulphuric acid plant to supplement phosphoric acid production. By Deon Ngee Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Business intelligence reports
Get concise, trustworthy and unbiased analysis of the latest trends and developments in oil and energy markets. These reports are specially created for decision makers who don’t have time to track markets day-by-day, minute-by-minute.
Learn more