Argentina's 2019-20 soy output forecast down 5% on Feb estimates: BAGE

New Delhi — Soybean output for Argentina -- the world's third largest soy producer and exporter -- is forecast to be at 52 million mt, down 4.6% on February estimates and 6% year on year, in 2019-20 crop year (November-October), on dry conditions in Córdoba and Santa Fe, a Buenos Aires Grains Exchange report said Thursday.

Of the projected planted area of 17.4 million hectares for the 2019-20, only 39% of the soybean crops were in good to excellent conditions in primary soy producing regions, the report said.

A lower Argentinian soybean output projection could give a little support to global soybean prices, which are reeling from a coronavirus-led global transportation lock down and African swine fever outbreak in China, world's largest soy importer, market sources said.

According to S&P Global Platts, SOYBEX FOB Santos for April loading was assessed at $343.29/mt, down 2.5% month on month, while SOYBEX FOB New Orleans for April was determined at $342.91/mt, down 1.5% on the month, as of March 11.

The Latin American nation is projected to export 8.2 million mt of soybeans in 2019-20, down 10% year on year, the USDA said in its latest world agricultural supply-and-demand estimates. The country's soybean meal exports are forecast at 30 million mt, up 10%, while soybean oil shipment are projected at 5.8 million mt, up 14% year on year.

But the market holds a bearish outlook toward Argentinian soybean complex exports.

Argentinian farmers could face tough times in coming months due to lower soy output forecast in 2019-20, which combined with the government's decision to hike export tariffs to 33% in March, from 30% in December could fuel market uncertainty, market sources said.

Because of the higher tariffs on soybean complex, the farmers could also see less incentive in producing the crop in the next crop year starting November 2020.

The new Argentinian government, headed by President Alberto Fernandez, has resorted to implement tough fiscal measures to revive the country's debt-laden economy, which has struggled for the past few years, an analyst said. And country's soybean farmers are one of its primary targets.

Already facing tough competition from Brazil and US, world's top soybean producers and exporters, the Argentinian farmers face uncertain future, due to the latest export tax hike, sources said.

The Chinese buyers generally prefer Brazilian and US soybeans over the lower-priced Argentinian beans, a local Chinese crusher said. On average, the protein count in Argentinian beans is less compared with the other two origins.

Protein count is an important parameter for Chinese soy buyers as the country processes over 80% of imported raw soybeans into protein-rich animal feed, to meet its burgeoning domestic meat consumption.