Limited supply constricts soy crushing in Argentina

By Jane Byrne

- Last updated on GMT

© GettyImages/vbacarin
© GettyImages/vbacarin

Related tags soy crushing Argentina Soybean meal

The Argentinian soybean crushing industry has been operating well below its potential due to the currency crisis.

The South American country is the world's largest exporter of soybean meal and oil but, at present, a little over 33m MT, more than 50% of the Argentinian soy crop stock, is still being hoarded by soy farmers, who are waiting for devaluing of the Argentinian peso, according to a S&P Global Platts release​.

The analysts were referencing comments made by Thomas Mielke, executive director of Hamburg-based forecaster Oil World, who spoke on the issue during the Globoil India webinar yesterday [October 8].

The Argentinian government recently revised its foreign currency transaction policy, under which it has become more difficult for the soybean farmers to receive dollars for their soybean export sales. With limited raw soybeans supply, the Argentinian crushers are struggling to meet rising global demand for soybean meal (SBM) and oil, said Mielke.


Argentina’s central bank is trying to stem a fall in hard-currency reserves by restricting access to dollars, wrote the Buenos Aires Times in September.

“At the same time, authorities have allowed multiple exchange rates for the peso to proliferate, with the official, controlled rate far stronger than others,”​ it reported.

The media outlet said that is resulting in soy farmers hanging on to their crops in a bet that the official rate will weaken, giving them more pesos for their beans priced in dollars. “It’s a waiting game that will deprive Argentina’s crushing industry of feedstock, sending buyers of soy meal and oil to US processors.”

Lower crush forecast

Gustavo Idigoras, president of Argentina’s CIARA-CEC chamber of grains exporting companies, which represents global traders such as Louis Dreyfus Company, ADM, and Cargill, told Reuters in September that Argentina’s soy crushing volume will drop around 9.5% this year.

He said that the country’s crushing plants would only crush around 38m tons of soy in 2020 compared to the 42m tons they processed in 2019. and he said idle capacity currently was at 50%.

ADM’s CFO, Ray Young, speaking at JP Morgan All Stars Conference​, last month, noted that Argentina has some challenges with farmers holding back the soybean crop as a hedge against a devaluation of the currency “And so the global meal buyer will be coming to the US in the fourth quarter.”

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