Soybean crushing capacity has not recovered to usual levels in Argentina (historically top global soybean meal exporter) following the severe drought in the 2022/23 season, which curbed soybean production to 22 million metric tonnes, the lowest level since the 1999/2000 season. According to the Rosario Stock Exchange (BCR) on 3rd November, soybean crushing reached the lowest level in 22 years for September at 1.9 million metric tonnes. More notably, the BCR stated that soybean crushing for the remainder of the campaign is estimated to total 10.4 million metric tonnes, a challenge for the industry as soybean available for sales remains scarce, with normalisation only expected to occur in March/April 2024 when harvest begins.
As a result of low stock and the prolonged economic turmoil in Argentina, farmers have continued to hold off on sales, despite the extension of the fourth soy dollar programme for the second time to 17th November. The significant decline in Argentinian crushing capacity and poor farmer sales have led to a shift in global soybean meal trade flows, with demand shifting from the historically top soybean meal exporter to the US. Additionally, increased US soybean crushing for soybean oil as biodiesel feedstock in recent months has resulted in sufficient availability of soybean meal as a secondary product. As a result, the shift in demand for US soybean meal has supported CBOT soybean meal futures prices, with the Dec-23 settlement climbing by 21.7% m-o-m to $447.4 per short ton on 7th November. Gains in soybean meal prices have thus pressured US soybean oil prices as higher crushing for soybean meal has led to increased soybean oil output despite lower domestic demand for soybean oil by the biodiesel sector, as the Environmental Protection Agency’s (EPA) blending mandate target is near completion.