“This season sowing began optimistically, with most soybeans planted on time compared to last year,” noted the outlook.
However, in the southern part of the country including Rio Grande do Sul and Parana, rains will be needed in January to avoid negative impact on the crop, wrote the US Department of Agriculture (USDA) attaché.
The report also estimates a higher crush forecast for 2022/23 - 51.5 MMT - based on available supplies and increased demand for soybean products.
“Crush demand will ultimately be impacted by the new administration's biofuel mandate policy, which is expected to be decided by March 2023.”
Weather disruptions in Argentina
Crossing to Argentina, and that country’s soybean meal (SBM) premiums have risen to a record high on supply concerns, says S&P Global.
The world's largest exporter of SBM, Argentina has been facing weather-related disruptions to its 2022-23 soybean crop, the planting of which is underway, said the analysts.
“Due to hot, dry conditions in key growing areas, the seeding pace was at 81.2% of the expected acreage as of January 4, five percentage points slower on the year and 11 percentage points behind the five-year average for the period,” noted the S&P Global team, citing data from the Buenos Aires Grain Exchange (BAGE).
The unfavorable weather is linked to La Niña conditions that are at play for the third consecutive year.
“As a result, some market sources doubt that the nearly 50 million mt expected by the US Department of Agriculture for Argentina's 2022-23 soybean crop will be achievable. Some sources put the potential output at 5 million mt below that level or even lower.”
Farmers refrain from selling beans
Farmers have also been slower to sell their beans this month to date, as they expect a relaunch of a government program that gives soybean exporters an advantageous exchange rate.
“Soybean farmer sales in the country were said to have weakened again after seeing an increase in December amid the second round of the so-called ‘soybean dollar’ - a special forex rate program applied to exporters to stimulate farmer selling and increase the central bank's reserves.”
Around 6MMT of soybeans were reported traded or priced in Argentina under the program in December 2022 after a similarly successful measure introduced by the government in September.