Cash FOB basis levels for soybean meal and oil in Brazil have dropped to below those basis levels in Argentina, an unusual scenario that comes amid supply uncertainties raised by poor soybean farmer sales and low crushing volumes in Argentina.
On Oct. 25, Platts assessed the Brazilian FOB Paranaguá soybean meal premium at plus $35/st for December loading while the Argentinian FOB Up River for the same month was at plus $37/st to the Chicago Board of Trade December (Z) futures.
As for soybean oil, the FOB Paranaguá basis for December dates was assessed Oct. 25 at minus 1,130 points to the CBOT Z contract, 80 points below the FOB Up River level, according to Platts data from S&P Global Commodity Insights.
It was the first time since Aug. 24 that front-month bases for both soybean sub-products were indicated weaker in Brazil compared to Argentina, which usually sees a price discount to its competitor mainly due to freight and logistic costs.
But supply concerns in the world’s largest exporter of soybean meal and oil have been prompting a supportive tone for FOB Up River basis levels.
Soybean crushing in Argentina totaled 2.87 million mt in September, an 8.7% drop on the month and 22.4% lower on the year, according to the latest official data. The period was marked by huge volumes of soybeans sold or priced by farmers due to the incentive of a preferential currency exchange rate set by the government.
But low margins limited the interest in crushing, and since the end of the so-called “soybean dollar” on Sept. 30, soybean farmer selling has sharply waned, sources said.
The picture for the year is not different. Argentinian plants crushed nearly 30 million mt of soybeans during January-September, which was 11% lower on the year, with soybean meal and oil production dropping by 12% and 30.4%, respectively, to 21.33 million mt and 4.57 million mt.
Brazil, in turn, has been seen as a “safer” supplier amid the doubts hovering around Argentina. Driven by historic-high margins in the first half of 2022, Brazilian plants were expected to crush a 49 million mt record of soybeans this year, according to the country’s oilseeds crushers association, or Abiove.
As a result, Brazil’s soybean meal and oil outputs for 2022 were also pegged by Abiove at record volumes of 37.50 million mt and 9.90 million mt, respectively.
