The reported exports sales of soybeans (called DJVE in Argentina) for the present marketing year (2016/17) accumulated 4 million tons at June 6, being the lowest figure in less than 6 years. The strong fall in the soybean prices at the beginning of the year and the slight devaluation of the argentine peso were not incentives enough to boost the sales pace of the farmers. Those were the reasons behind the negative margins that the export and the industrial oilseed sectors are experiencing. The margins have been weak, and even negative, according to different cost approaches.
The data up to June 6, obtained from UCESCI (public source) showed a weak pace of soybean export sales. This slow pace is compared with the export sales registrations of the previous six marketing years at the same date of each year. Contrasting with the average of the last five seasons, the figure is well behind the 5.85 million tons average.
There is also a slow pace in the export sales of soy products, but the data indicates a better relative performance of soymeal and soybean oil sales against the bean commitments. Soymeal exports sales accumulated 9.5 million tons to June 6, above the 5-year average which amounted to 8.75 million tons. At the same date last year, soybean meal sales of the current season amounted to 11.5 million tons, but it must be taken into account that in the period of 2016 there was a strong devaluation and the removal of export taxes in Argentina (which strongly boosted exports). That is the reason for using the 5-year sales average as a measure of comparison.
Sales of soybean oil accumulated 1.38 million tons at June 6, behind the five-year average of 1.6 million tons. This performance correlates with the weak number of oil shipments for the first four months of the year, which stands at 1.6 compared to 2 million tons in 2016 (INDEC data). It should be noted that the lower level of shipments of soybean oil was offset by a higher shipment of biodiesel, increasing by 85,000 tons from 263,000 tons exported in the first quarter of 2016.
Net margins and local market
The net margins of the industrial and exporter sectors were very weak, even negative. They have fallen so much that even though soybean reached 3950/4000 $/ton on Tuesday, both raw material exporters and industrial crushing plants showed a heavily negative margin in theoretical terms. It should also be noted that the exchange rate remains practically unchanged, adding to the almost unchanged prices this week in Chicago. In this context, the only thing that boosted domestic prices during this week was the rigidity of the supply and the strong need for building inventories, mainly from the crushing sector.
The calculation of the export sector margin arises from subtracting the theoretical price that exporters can pay for the grain (FOB prices – Port costs - Duties - Marketing expenses) from the price actually paid to the farmer in the cash market. We used the MATBA May soybean future price for March and April. As of May 1, we used the reference price for soybeans published by the Rosario Board of Trade in argentine pesos ($) divided by the rate of exchange. For the industrial sector, we used the last method for the entire period. All FOB shipment prices are for the Up River ports, except on June 05, 06 and 07. In the latter period, we used the FOB price of the Ministry of Agroindustry for the export sector, since no bids for shipping in June were reported.