Brazilian Soybean Meal Gains Advantage Amid Argentine Supply Concerns

Brazilian soybean meal prices have risen due to uncertainties in Argentine supply. A strike threat from Argentina’s oilseed union, SOEA, is causing traders to secure Brazilian meal. Meanwhile, Brazilian weather conditions support soybean harvesting, while government policies affect biodiesel mandates and the overall market dynamics for soybean oil and meal production.

Recent disruptions in Argentina’s soybean processing capacity are causing Brazilian soybean meal prices to surge. The price for Brazilian soybean meal, assessed at $327.38 per metric ton (mt) on February 26 at FOB Paranagua, now exceeds Argentina’s FOB Up River price of $323.53/mt for April shipment. This shift is due to uncertainties surrounding Argentina’s supply amidst potential strikes affecting oilseed crushers due to wage disputes within the Vicentin industry.

The Argentine oilseed union, SOEA, has signaled that a national strike may occur if salaries are not paid by the Vicentin group, which has a history as a leading soybean crusher in the country. On February 25, SOEA cautioned that failure to disburse wages for February would initiate widespread disruptions at oilseed processing plants across Argentina. This concern further fuels traders’ moves to secure Brazilian soybean meal to cover immediate needs.

Brazilian traders report significant activity in the export market at FOB Paranagua. Recent sales for April shipments have led to improved pricing dynamics, as domestic contracts contribute to more favorable pricing conditions. The basis for shipments has shifted from a discount of $11 per ton to a narrower one of $5.50 per ton in less than a week, due to rising premiums in response to potential supply shortages.

The Brazilian market anticipates shortages in soybean meal, particularly crucial for animal feed production. Recent forecasts suggest that rain in Argentina will aid soybean crop developments, which had previously suffered from adverse weather. Meanwhile, Brazilian weather conditions favor soybean harvesting, contributing to a robust supply scenario that could influence prices further.

Additionally, the Brazilian government will maintain its current biodiesel blending ratio of 14% until further evaluations, delaying an increase to 15%. This lower mandate implies decreased demand for soybean oil, which traditionally affects soybean crushing volumes. According to S&P Global Commodity Insights, Brazil aims to crush 57.5 million mt of soybeans in 2025, exporting 23 million mt of soybean meal, while Argentina’s estimates are at 44 million mt crushed with 30 million mt exported.

In summary, Brazilian soybean meal is currently experiencing higher market activity due to impending disruptions in Argentine supplies and a potential strike by labor unions. This has led to firmer pricing in Brazil’s export markets, favoring traders who aim to hedge against supply uncertainties. Moreover, seasonal factors and government policies in both countries further complicate the outlook for soybean processing and meal production.

Original Source: www.spglobal.com