Frost fear grips Argentinian soybeans output forecast

The Argentinian soybean output forecast for 2021-22 crop year (November-October) is expected to be affected by frost in recent days in major areas, according to the Buenos Aires Grains Exchange, or BAGE, which is likely to stoke supply fears.

Frost has mostly affected North of La Pampa-West of Buenos Aires region, which is a primary soybean producing area, BAGE said April 7. Depending on the magnitude of the losses, they could affect our current production projection, it said.

The Argentinian soybean output is currently forecast at 42 million mt by BAGE, down 1.5 million mt on the year.

Early season forecast by different agricultural agencies were close to 49 million mt. But severe drought since November led to sizable cuts in the projections.

Rosario Grains Exchange, known as BCR, now sees the Argentinian soybean output for 2021-22 at 40 million mt.

With Brazil also facing significant cuts in its 2021-22 output expectations, down over 23 million mt from early season estimates to 122 million mt, global oilseed prices have soared over 25% year on year.

S&P Global Commodity Insights assessed April 7 SOYBEX FOB Santos for May deliveries at $656.82, up 26% on the year.

Harvest progress

BAGE has estimated that as of April 6, 8.8% of the projected acreage of 16.4 million hectares for 2021-22 has been harvested amid dry weather, which is up 4 percentage points year on year.

However, the farmers are facing huge challenges as the truckers' associations plan a nationwide indefinite strike from April 11.

Federation of Argentine Transporters (Fetra) announced force majeure on April 4 citing the shortage of diesel. The federation has demanded ample supply of diesel and renegotiation of freight rates to end the strike.

In Argentina, over 86% of soybean and corn transportation from farm areas to ports are dependent on road transportation. So, if the strike goes ahead as planned, supply of almost 35 million mt of soybeans will become uncertain.

Earlier on March 29, the Confederation of Hydrocarbons Entities (Cecha) had raised concerns that the Argentinian soybean and corn farmers are expected to face diesel shortage during the crucial harvest period in coming weeks.

The recession-hit Argentinian government imports expensive fuel and sells then domestically at 32% cheaper rate, Cecha said. As a result, local oil companies are facing heavy losses and are unwilling to purchase more, it said.

The Argentinian field activities are heavily dependent on diesel-operated agricultural machineries and the fuel shortage couldn't have come at a worse time as the peak season for country's corn and soybean harvest has just arrived for marketing year 2021-22.

Argentina is world's third largest soybean producer and exporter. It is also the biggest shipper of soybean oil and meal.