South American soybean meal prices drop to four-year lows

Soybean meal FOB prices in South American markets fell to their lowest levels in over four years, driven by declining Chicago Board of Trade futures, robust crushing rates and expectations of bump crops in the region.

On Nov. 14, Platts assessed the Brazilian FOB Paranaguá soybean meal outright price at $322.42/mt and the Argentinian FOB Up River price at $320.77/mt. These figures represented the lowest spot prices since mid-July 2020.

This price decline is partly attributed to losses in CBOT, where the front-month contract has dropped more than 20% this year, partially influenced by a bearish price spread resulting from higher soybean oil futures.

Soybean processing in South America has remained strong. The Argentinian crush is projected to reach 42 million mt in the current 2023-24 marketing year (April-March), marking a 45% increase from MY 2022-23, when it suffered due to adverse weather conditions, as estimated by S&P Global Commodity Insights.

"We see no barriers preventing Argentina from maintaining high crush volumes. The robust product demand in the upcoming months is anticipated to sustain a strong crushing pace," analysts from Commodity Insights stated in the Weekly Soybean Complex report issued Nov. 22.

In Brazil, September crushed volumes reached a record 4.56 million mt for the month, bolstered by "favorable industry margins driven by robust oil prices and strong demand for biodiesel," according to Commodity Insights' analysts, who predict a historic soybean crush of 55 million mt for 2024.

As the world's largest exporters of soybean meal, Argentina and Brazil are also poised for significant soybean crops in the 2024-25 cycle. Commodity Insights forecasts indicate production of 49.50 million mt in Argentina and 166.50 million mt in Brazil.

In Argentina, the FOB Up River basis was assessed Nov. 14 at $4/st over CBOT, a stark contrast to a premium of $38/st a year ago, according to Platts, part of Commodity Insights.

In Brazil, the FOB Paranaguá front-month premium has decreased to $5.50/st from $27/st a year ago.