Following a report by the Buenos Aires Grain Exchange (BAGE) on 2nd March stating its plan to revise the Argentinian soybean crop, as reported by Mintec here, the latest revision released on 9th March pegged the crop at 29 million metric tonnes. The revision to the crop estimate represents a decline of 13.4% compared to the previous estimate in February. The Rosario Board of Trade (BCR) pegged the crop even lower at 27 million metric tonnes, bringing the crop to its lowest level since the 1999/2000 marketing year (MY). Similarly, the USDA released its monthly World Agricultural Supply and Demand Estimate (WASDE) report on 8th March, revising the Argentinian crop downwards to 33 million metric tonnes, albeit higher than estimates by the BCR and BAGE.
Notably, the BCR’s crop estimate is closer to what market participants expected, at 26-28 million metric tonnes, due to the severity of the dry weather conditions and lack of rainfall in Argentina. As a result, 45% of the production initially estimated at the start of the season has already been lost, according to the BCR, and further reductions are likely with weather conditions not showing signs of improvement. However, the record crop from Brazil (estimated at 153 million metric tonnes) is likely to offset Argentinian losses, potentially increasing the total South American crop by 9.4% y-o-y. While persistent rainfall has prevented the harvest from reaching its full potential, estimates released by CONAB on Monday indicate that 43% of the 43.3 million hectares (ha) sown has been harvested (+10 percentage points w-o-w). However, logistical issues persist, such as difficulties acquiring trucks, curbing exports of soybean and derivative products.
Delays to the Brazilian harvests and slowing exports, coupled with the significant decline in crop output from Argentina, is already impacting global soybean and products trade flow. According to the USDA, Argentina, historically the largest soybean oil and meal exporter, is estimated to import a record supply of beans this season at 7.3 million metric tonnes, 47% higher than its five-year average, to offset its losses. Projections of higher imports from Argentina and the likelihood of an increase to the Brazilian biodiesel mandate, which is to be defined this month by the government, could cause global soybean and derivative supply to tighten.