Jul 06, 2018

Argentina could Import 6 Million Tons of Soybeans from Paraguay

Author: Michael Cordonnier/Soybean & Corn Advisor, Inc.

Farmers in Argentina have completed the harvest of a very disappointing 2017/18 soybean crop. A severe drought during the heart of the growing season resulted in a total production estimated at approximately 36 million tons, which is down more than 20 million tons from the 57 million tons of soybeans produced in Argentina in 2016/17. As a result, Argentina will need to import soybeans in order to keep its crushing industry up and running.

According to a recent report in the newspaper La Nacion, the president of the Argentine Center for Grain Exports and Vegetable oil Industries (Ciara-CEC) estimated that Argentina will import as much as 6 million tons of soybeans from neighboring Paraguay.

Paraguay is estimated to have produced approximately 10 million tons of soybeans in 2017/18 and the USDA had estimated that Paraguay would export 6.2 million tons of soybeans in 2018. The vast majority of Paraguay's soybean exports are barged down the Parana River to export facilities near the Argentine city of Rosario. Upon arrival, the soybeans are either transferred to ocean going vessels or into storage facilities.

The majority of Argentina's crushing facilities are also located in the same area, so it would be relatively easy to transfer the soybeans to the crusher's storage facilities instead of vessels because the crushers and the exporters are generally the same companies.

There are reports that the crushers are operating at less than 70% of capacity and that they need the soybean imports in order to keep their facilities up and running.

Another reason for importing soybeans into Argentina is that closing down a facility or reducing operations and laying off employees due to a lack of soybeans is probably not feasible in Argentina. Cargill tried to reduce operations at one of their facilities several months ago and lay off a couple dozen employees and it led to strikes and protests by the union representing the workers. It is probably less of a headache just to import the soybeans than to deal with the work rules in Argentina.

For their part, the Argentine government has indicated that the country would import 3.5 million tons of soybeans in 2018.