Domestic soybean trades (in MT) hits lowest point in last 19 years
Domestic SB sales total 14.1 Mil MT, the lowest volume in 19 years. The lower production of the campaign is the main reason, to which we have to add the slow commercial dynamics abroad: export business is the lowest in the last decade.
With more than a month having passed since the start of the 2021/22 SB campaign, grain trades show a clear impact due to the lower production of the campaign and the delayed external demand. According to MAGyP data, the SB volume sold reached 14.1 Mil MT on April 27, the lowest in absolute terms in almost two decades.
However, if we consider sales as a proportion of the production obtained in each campaign, the record for the current cycle is more in line with historical figures. The 14.1 Mil MT marketed represents 34% of the 41.2 Mil MT that are estimated to be produced for the current cycle, similar to the 36% of the previous year and the 37% of the average of the last five years. Moreover, it is higher than the 31% it represented in 2018/19.
Needless to say, the slower pace in the internal grain trade has its correlation with external sales of beans. According to export permit (DJVE) data, foreign sales of SB amount to just 347,000 tons, falling below the 663,000 tons of 2017/18, which until now was the lowest record previously held for this time of year. This way, bean exports are at an all-time low for this time of year since at least 2011/12.
If we consider the entire SB complex, the situation becomes uneven among the different products. Looking at export permits (DJVE) for oil and meal/pellets combined, foreign sales have been declared for 7.8 Mil MT, 25% less than what had been sold at this point in 2021. Furthermore, when we look at the volumes declared in the last decade, this is the second-lowest tonnage, only surpassing what happened in 2017/18 when 5.6 Mil MT of all the complex’s products was sold abroad.
This lower-declared tonnage compared to previous years is fully explained by lower exports of soybean meal/pellets. These add up to a total of 5.7 Mil MT, while last year 7.5 Mil MT had been declared. In contrast, SB oil DJVEs total 1.7 Mil MT to date, a record since at least the 2011/12 campaign.
It becomes evident that the persistence of the Russian-Ukrainian conflict (which has reduced the world supply of sunflower oil) combined with the limitations on the export of palm oil imposed by Indonesia has led to a lower global supply of vegetable oils, boosting foreign sales of Argentine SB oil.
As for maize, the volume sold does not present too much of a difference from what was observed in previous years. Currently, 23.7 Mil MT of grain have already been sold, somewhat below the volume that had been marketed at this point in the previous year (24.9 Mil MT) but exceeding the average of the last five campaigns (18.5 Mil MT). Additionally, when we consider sales as a proportion of production, we find that these represent 48%, identical to the sales proportion represented over the production of the previous year.
Lastly, a comment on foreign sales of maize. Today, the Undersecretary of Agricultural Markets (SSMA) through Circular No. 3/2022 established a new Export Equilibrium Volume of 30 Mil MT, increasing by 5 Mil MT from the 25 Mil MT initially set last December.
Currently, the accumulated DJVE of corn totals 23 Mil MT. After having started the campaign as a record for the time of year, the existence of the Balance Volume prevented the registration of new export permits, meaning that the current campaign was surpassed by what happened in last year, which at this point had already registered permits for 26.3 Mil MT.
Therefore, the increase in the quota will allow a greater dynamic to the export market of maize. Meanwhile, it should also be noted that the SSMA also established a Balance Volume of cereal for the next campaign 2022/23 of 10 Mil MT.
What happened in terms of prices?
In the past 2 weeks we have had a mainly bearish trend in the local SB market. The Arbitration Chamber of Cereals of the Rosario Stock Exchange revealed SB board prices that ranged from 449.1 USD/MT (on March 4th) to 425.1 USD/MT on May 5th. This decline suggests a fall of 5.3% in a matter of 14 days. However, we should note that local prices are well above the records of past campaigns for this same time of year. This way, the increase compared to the 2020/21 is 25.4%, highlighting that this campaign occupies the second-highest value for this time of year. Likewise, the average of the last 5 campaigns for this same date, which was 263.2 USD/MT, so the latest value of SB represents a jump of 61.5% compared to said average.
For its part, maize progressed without no marked trend. Greater volatility was seen between corn prices in the last 2 weeks. Board values on April 21st were at 270 USD/MT, while prices were set at 264.7 USD/MT on May 5th, showing a decrease of 2.1 %. As is the case for SB, local prices measured in dollars also set records for this time of year, with little more than 2 months having elapsed since the formal start of the harvest. Comparing prices with last season (238.1 USD/MT), as well as with the average of the last 5 cycles (167.1 USD/MT), we have increases of 11.2% and 58, 5% respectively.
Lastly, regarding the foreign market during the week, the impact of the war between Russia and Ukraine once again generated pressure on oils, underpinning the prices of futures traded in the Chicago market. The contract with the largest volume of SB oil reached a historical nominal record, closing on April 28th at 1,909.2 USD/MT. However, this value didn’t stand the test of time, since by May 2nd a settlement of USD 1,765.7 (-143.5 USD/MT in only 2 rounds) was already seen. Finally, the values of the oilseed by-product closed the session on Thursday at 1,804 USD/MT.
Source: https://bcr.com.ar/
Photo: REUTERS/Stringer
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