Argentinian soy meal market surges on demand, slow farmer selling

The Argentinian FOB Up River soybean meal market has strengthened above Chicago Board of Trade futures amid improving export demand and a slow pace of sales by farmers.

S&P Global Platts assessed the Argentinian FOB Up River soybean meal basis October shipment at a $2/st premium to the corresponding CBOT contract Aug. 18.

That marked a $13/st increase for a front-month loading position so far in August.

The rise has come amid a historically shallow Parana river, a vital artery for Argentinian agricultural exports from Up River terminals.

That has been increasing costs for exporters as vessels need to carry less volume to navigate, with subsequent pressure on local FOB soybean levels.

Argentinian values dropped as low as a $12/st discount to CBOT late July due to the Parana's worsening situation, but have firmed since.

The Indian government Aug. 16 approved imports of 1.2 million mt of genetically modified soybean meal amid domestic shortages of livestock feed, sources said. Argentina and the US are likely to be the main sources, the All India Poultry Breeders Association said.

There was talk of some trades related to that Indian demand in the Argentinian Up River cargo market over recent days.

Farmers in Argentina, however, have been holding on to this year's soybean harvest as a protection against a weaker peso. Consequently, crushers already dealing with poor margins have been facing low supplies of raw material to run their operations, according to sources.

For the 2020-21 marketing year (April-March) through Aug. 11, soybean sales by Argentinian farmers totaled 27.3 million mt, down from the 29.4 million mt sold by this time in the prior season, according to agriculture ministry. The country's 2020-21 soybean output is estimated at 43.5 million mt by the Buenos Aires Grains Exchange.

Argentina is the global top exporter of soybean meal, and despite the recent spike, FOB soybean meal prices in the country remain below those at this time last year, at a $14/st premium to CBOT prices.