Argentina, the world's leading exporter of soymeal and soybean oil, is likely to have soybean production of 27 million tonnes this season, the lowest in nearly a quarter century, as a result of low rainfall and high temperatures, Argentina's Rosario grains exchange has said. In 2022, exports of soybean byproducts, Argentina's main source of foreign currency, totaled $18.519 billion.
Gustavo Idigoras, head of the CIARA oilseed and grain processing chamber, said the industry faces a "crisis" with industrial capacity idleness approaching 70%, the highest ever when there are no protests. Although harvesting for the 2022/23 season has not yet started, farmers have been reluctant to sell stored grains, fearing a meager harvest could lead them to run out of reserves, after the historic drought, Idigoras said.
"This has led producers to stop sales positions in the face of a scenario of high uncertainty in the coming months," he said. In February, farmers sold 622,300 tonnes of soybeans to the milling sector, almost a third of the 1.7 million tonnes sold during the same month last year, according to data from the agriculture ministry. Argentine producers still have in their stocks about 6 million tonnes of soybeans from the 2021/22 cycle, Idigoras said, a lower figure than usual as many farmers accelerated their sales in the second half of 2022 driven by a preferential exchange rate for soy exports proposed by the Government. A decrease in grains could even lead Argentina to import soybeans from its neighbors Paraguay and Brazil, Idigoras said, adding that this would not exceed 8 million tonnes. "It is a palliative," he said, "but it least it leaves us breathing room so as to not shut the factories." "We are making a great effort to avoid (milling) suspensions," he added. "It is a very difficult year for companies to sustain employment." The beginning of the year is, for seasonal reasons, the one with the least activity of the factories in Argentina, when -according to CIARA data- idle capacity in the sector has been an average of 59% in the last five years. (Reporting by Maximilian Heath; Writing by Carolina Pulice; Editing by David Gregorio)
