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Outlook for the soybean oil market
Argentina will supply the market with about 47.6% of the world's volume of vegetable oil from soybeans. The second-largest supplier is Brazil, which will contribute close to 13.7% of the volumes traded with 1.7 Mt. The situation in Paraguay's processing industry continues to attribute a high degree of uncertainty regarding its capacity to supply raw materials since estimates of harvests between 2.97 Mt and 4.05 Mt have been reported. This scenario could significantly complicate the Paraguayan industry. In 2021, 2.8 Mt of soybean were processed, which is low considering the average of the last 3 seasons was 3.45 Mt. At the same time, this country is key in supplying soybean to the Argentine crushing industry, complementing the local production of the grain. Therefore, the reduction in the exportable balance of the neighboring country will have a direct impact on Argentina's soybean oil and soybean meal production capacity.
It should be noted that the international vegetable oil market is currently in a situation that could be considered a bottleneck. Among the most relevant issues, in the last few months, we have seen factors that are limiting the international supply of oils of several products. In this regard, the restrictions on palm oil exports by Indonesia, as well as the drought that affected rapeseed crops in Canada, the war conflict in the Black Sea region, and the South American drought have limited the possibilities of supplying the international vegetable oil market.
Outlook for the soybean meal market
A similar situation is seen in the case of soybean meal, with Argentina leading the world market, while Brazil follows in second place. However, the difference is narrower in this case, since the estimates for Argentina report exports of 28 Mt expected for the 2021/22 cycle, while the neighboring country is expected to contribute 16.5 Mt, representing 41.3% and 24.3% of international trade, respectively. Despite this, and the fact that these two countries will maintain their market share, South America as a whole is expected to reduce its share between seasons from 71% to 68.9% in the 2021/22 season. On the other hand, the U.S. will increase its soybean meal market share from 18.2% to 19.3% in the current marketing year.
April 1, 2022/ Rosario Board of Trade/ Argentina.
https://www.bcr.com.ar
