Rapidly falling water levels in the Parana River have hindered trade in Argentina, particularly for soyabeans, due to a risk of trade vessels being grounded. As a result, vessel loads need to be reduced, leading to delays and disruptions at ports.
Argentina’s key inland port in Rosario has had a 66% fall in soyabean exports y-o-y between January and May 2021, down to just 271,808 tonnes, primarily due to the falling water levels. The water level in Rosario, which is the origin for 80% of the country’s agricultural exports, fell to around 40cm above sea level, significantly lower than the five-year average of 3.5m above sea level, according to Argentina’s national water agency INA.
The current estimate is that the water level will be just 7cm above sea level on 6th July, and with further dry spells forecast in the region over July, the issue could reach a critical level for exports.
Now, with lower volumes being loaded to avoid grounding, there could be global supply tightness in the tail end of the 2020/21 marketing year (Oct’20 – Sept-21), thereby supporting soyabean prices. However, with higher y-o-y production forecast globally in the 2021/22 MY, price increases. The CBOT soyabean price increased 17% over the corresponding January-May period, but has recently weakened due to reduced biofuel demand, following lower blending requirements in the US and a resurgence in global COVID-19 cases, falling to USD 514/MT on 2nd July.