Sep 15, 2023

Latest "Soybean Dollar" Program Accelerates Sales in Argentina

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

Soybean sales in Argentina have accelerated since the latest "soybean dollar" program started September 5th. According to the Rosario Grain Exchange, during the first week of September, farmers had sold nearly one million tons of soybeans compared to 240,000 tons sold during the last week of August. From September 1st through September 12th, sales have totaled approximately 1.5 million tons.

The increased sales are the result of a devaluation of the Argentine peso and the latest "soybean dollar" program that allows crushers to exchange a quarter of their receipts at the open exchange rate, which is more than double the official exchange rate. The current "soybean dollar" program will end September 30th.

Exporters have also been more aggressive in selling soybeans to China since the program started. It has been reported that three cargos of soybeans have recently been sold to China. The main purchasers of Argentine soybeans and soybean products are China, India, and Holland.

The 2022/23 soybean crop in Argentina was severely impacted by a historic drought and crushers have been unable to source enough domestic supplies to keep their facilities operating at more than about 50% capacity. They have turned to soybean imports from neighboring Paraguay and Brazil to supplement the supply.

From January through July, Argentina imported 7.19 million tons of soybeans, which is more than double the average of the last five years (3.2 million tons). During that period, Argentia has imported 3.6 million tons of soybeans from Paraguay (five-year average is 2.7 million tons) and 3.2 million tons from Brazil (five-year average is 198,000 tons).

Importing soybeans from Paraguay is a common practice in Argentina. Paraguay is land-locked, so most of their soybean exports are barged down the Parana River to crushers at Rosario, Argentina. At that point, the soybeans are either offloaded to crushers or onloaded to ocean vessels.

The Rosario Grain Exchange estimate that approximately 7 million tons of the 2022/23 soybean crop in Argentina are yet to be sold.

Farmers in Argentina are hoping for increased grain production in 2023/24 due to El Nino which usually results in improved rainfall. The Rosario Grain Exchange is estimating the 2023/24 soybean production at 50 million tons compared to the 21 million tons in 2022/23. For corn, the exchange is estimating the 2023/24 production at 55 million tons compared to 35 million in 2022/23. Farmers will start planting their early corn in September and they will start planting soybeans in October.