Rosario Board of Trade’s Research Department has updated its supply and
demand estimates for soybean 2017/18 in Argentina, which will formally
begin next April. We now expect a drop of production as a consequence
of the lack of rain, together with a rise in foreign and domestic
demand that will ultimately reduce ending stock by 30% YoY.
Our Research Department projects seeded area for soybean in crop year
2017/18 to drop 3% to 18.5 million hectares (Mha). Even when producers
intended to seed around 18.8 Mha (still behind previous year, as producers
favored corn), lack of soil moisture prevented further seeding.
At the same time, water deficit lowered potential average yield to 2.9 tons
per hectare, from 3.3 t/ha previously projected. With a smaller area and
lower yields, production for 2017/18 is now estimated at 52 million tons,
-9% YoY and the lower volume in five years.
Partially offsetting lower production, beginning stocks of soybean for
2017/18 marketing year are estimated at a record high of 12.5 million tons,
3MT above last season, though total supply will still fall below last
year’s by 2 MT.
On the demand side, we expect lower export taxes together with a
strengthening US dollar to boost consumption of soybean and byproducts.
Crushing is therefore now estimated at 44 million tons, +2% YoY but still
below 2014/15 record high of 45.1 million tons. Other domestic uses will
add another 4.8 million to disappearances, based on higher seedings in
2018/19 and a strong livestock industry.
Meanwhile, foreign demand is expected to pick up and absorb 9 million tons
of beans (above last year’s 8.1 million, but again behind previous year’s
record). Total demand will then reach 57.8 million tons, 1.8 million above
last year and second higher on record.
Higher demand and lower supply will ultimately lower stocks. We expect that
from 12.5 million of beginning stocks the 2017/18 marketing year leaves 8.8
million tons of ending stocks, -30% YoY and the lower volume in the last 5
Stock/consumption ratio will then fall from a record of 22% on marketing
year 2016/17 to 15% in 2017/18, the lower level since the marketing year
Last table summarize the main supply and demand indicators for soybean in
Argentina, according to Rosario Board of Trade’s Research Department to