The Buenos Aires Grain Exchange, in its report released on 2nd March 2023, stated it plans to revise its soybean crop estimate even lower than its current projection of 33.5 million metric tonnes. If realised, this would be the fourth time its crop estimate for this season is revised downwards, on the back of worsening dry weather conditions, lack of rainfall and recent frost. The report also indicated that 60% of the crop is now rated in poor condition, 4 percentage points (p.p) higher than the value reported last week and 35 p.p higher compared to the same period last year. Poor crop conditions, coupled with a declining economy (latest Consumer Price Index for Argentina: 98.8% y/y for Jan. 2023), have led Argentinian farmers to demand lower taxes and more favourable exchange rates for their exports, in a protest on 28th February.
Despite these concerns, this season’s record level crop estimates from Brazil, at 153 million metric tonnes according to the USDA, have limited further upward price rises. On 2nd March 2023, the US Chicago Board of Trade (CBOT) soybean futures price (Mar-23) was down by 1% week-on-week to USc 1,520/60 lbs bushel. However, logistical issues in Brazil could support prices in the coming weeks, according to market participants. A Mintec source stated, “logistics in Brazil are getting slower and slower, with waiting time at ports remaining high in Paranagua, Santarem and Itacoatiara at 30, 17 and 14 days, respectively.” Also, Brazil is set to further define its biodiesel mandate which was initially scheduled to reach B15 this month, which is a watch-point for soybean oil prices, as if realised, it could mean reduced exportable supply.