Unpublished: they predict that Argentina will have to import record volumes of soybeans to compensate for the losses of the drought

The various adverse weather conditions that affect military in the current campaign, in particular the drought, and the absence of public policies that lead to an increase in harvest levels, generate uncertainty in the main complex that brings foreign currency to the country. It is expected that in order to grind soybeans and turn them into oil and flour, for example, the level of imports will have to increase and it could reach a record figure.

In other words, the oil industry needs to import more soybeans to maintain its activity. You have to remember Argentina has the largest soybean milling hub in the worldand in fact it is the main exporter of by-products, soybean meal and oiland also stands out in the production and export of biodiesel. All this is due to the large installed capacity of the local industry, which currently stands at 70 million tons.

However, given an increasingly complicated climatic situation in the current soybean campaign, there are enormous difficulties and questions raised by the future scenario, in addition to which the production of the oilseed has fallen by year after year in the country. At one point more than 60 million tons were produced, last year it was 44 million tons and in the present 2023 depends on estimates and before the first frosts last Saturday a scenario between 34 and 35 million tonnes has been proposed. In all this, the weather is a determining factor, but the absence of public policies that encourage the increase in the level of planting and harvesting also has a high impact. One of the biggest demands of the soybean sector is to reduce the tax burden, where the effect of withholding taxes on exports is high, which is currently 33%.

A detail of all this was presented by the consultant and former Under-Secretary for the Nation’s Agricultural Markets, Javier Preciado Patino. “The industry is not competitive if it has a lot of spare capacity, that is, factories that are not working. Whereby imports of soybeans are used, mainly from Paraguay, but also from Uruguay, Brazil and Bolivia, to compensate somewhat for the lack of production in Argentina and also the low protein content. The regime in place is as follows: it is imported, processed (processed into oil and flour, essentially) and exported. From the point of view of the dollar equation, it is not negative but positive. In other words, the processing adds value to the import and that added value stays in the country,” he told this outlet.

In this regard, he recalled that between 2016 and 2022, soybean milling during the marketing year, between April and March, averaged 40.8 million tons. If 1,000,000 tonnes declared for extrusion are deducted from this figure, “this means that solvent milling requires 39.8 million tonnes”. It should be remembered that in the period of time analyzed by the consultant, the worst soybean campaign was recorded, which was that of 2017/2018 with a grinding for export of some 35.4 million tons.

In the current campaign, the consultant took for his analysis the total harvest projections of 34.5 million tons. At that, minus seeds, extrusion and undeclared use, Some 29.3 million tonnes would remain available for export crushing. Next, Preciado Patiño said that “assuming no soybeans are exported as such, 5.2 million tonnes would be needed to reach the 2017/18 low. To reach the average of 39.8, it would be necessary to import more than 10 million tonnes”.

In this sense, the question posed by the analyst was whether there is enough soy in Mercosur to supply the Argentine market. And in this regard, he said, “There is a precedent which is the economic cycle from April 2018 to March 2019 where 7.2 million tons were imported. In fact, the USDA forecasts 6.25 million tons against 3.8 in the campaign which is about to end. Could it be even bigger?

In the regional context, Javier Preciado Patiño highlighted as good news that Paraguay It will recover its production between 8.5 and 9 million tons, which ensures a greater volume of exports to its main destination, which is Argentina. As Brazil started a super harvest of 153 million tons and will have the rest to supply our country. But in 2022, faced with the failure of the Paraguayan harvest, they were Uruguay and Bolivia those who have grown as suppliers. To support what is to come, both origins should maintain the level of 2022, recovering Paraguay and adding more Brazil.

“We must carry out a policy that encourages the production of soybeans” (Preciado Patiño)

“Depending on the drop in production in Argentina and the needs of the industry one would think that a temporary soybean import floor would be 7 million tonnes to transform it and then re-export it as by-products. The important thing here, and which must be underlined, is that there is an added value in industrial transformation, and that the added value remains within the country and from the point of view of the trade balance, it is slightly positive, because what is exported more than what is imported. And it is also allowed to support all industrial scaffolding, installed especially in the Greater Rosario area,” commented the consultant.

And he concluded: “In all this, the most important point is that we must pursue a policy that encourages the production of soybeans, basically because it is the least fertilized crop, which is grown in rented fields, among other factors. There is a combo that should be addressed by the public sector and aligned with the private sector, namely how to manage the acreage that is planted today, improve yields and aspire to recover at least 60 or 65 million tonnes. This is all a pending issue that needs to be addressed urgently, as we are talking about the main export complex”.

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