Brazilian soybean meal pulls ahead as Argentina faces supply challenges

Spot export prices for Brazilian soybean meal have strengthened in recent days, distancing themselves from Argentina’s prices amid growing uncertainty over direct shipments from the latter country.

Platts assessed the price of Brazilian soybean meal FOB Paranagua at $327.38/t on February 26, compared with $323.53/t at Argentina FOB Up River. Both values are for April delivery.

By comparison, the FOB Paranagua price was $320.88/t on February 18. FOB Paranagua was US$320.88 per ton and FOB Up River was US$321.43 per ton. The price was US$320.88 per ton, according to Platts data from S&P Global Commodity Insights.

Participants said doubts about Argentina’s soybean processing capacity in the short term could prompt traders to immediately close positions in Brazil.

Argentina’s oilseed producers union SOEA, one of the country’s largest, announced on Feb. 25 the possibility of a nationwide strike that would disrupt soybean processing plants due to a labor dispute involving Vicentin industry representatives.

In a statement, SOEA said such a conglomerate must pay February wages after the Santa Fe province-based company made it clear that may not happen. Vicentin, which now leases its facilities to third parties, was once a major soybean processor in Argentina, usually the world’s top exporter of soybean meal and oil.

“We warn that if they do not pay their February wages, we will initiate a struggle plan that will paralyze all the oilseed mills in the country,” SOEA said in a statement issued Feb. 25.

According to the Brazilian trader, the FOB Up River export premium market was “free,” while the FOB Paranagua paper market saw an increase in business activity.

Indeed, several shipments changed hands for April shipments FOB Paranagua in recent days, with the basis for such shipments changing from a discount of $11/st to $5.50/st between Feb. 18 and Feb. 26, according to Platts data. Many of these deals involved pricing of domestic contracts, according to sources.

“[The Brazilian domestic] market sees this news [from Argentina] and thinks, ‘There will be a shortage of meal and the premium will go up.’ It’s better to close your position,’” the source said. “Then the premium will go up.”

Soybean meal is one of the main ingredients in animal feed in Brazil, especially for pork and poultry producers.

Other factors

In addition to a possible strike in Argentina, other factors have contributed to the strength of the Brazilian food market in recent days.

Forecasts point to rain in Argentina’s soybean producing areas, which should help the development of crops affected by hot and dry conditions between December and January. In Brazil, clear weather is forecast, which tends to accelerate soybean harvest, which was 36% complete as of Feb. 19, according to Platts.

In addition, the Brazilian government has decided to postpone the increase in the biodiesel share of diesel to 15% starting in March, with the current 14% share remaining in place until a new assessment.

The lower mandate requires less soybean oil for biodiesel production, as vegetable oil is the main feedstock for the Brazilian biodiesel industry. Lower demand for soybean oil, in turn, could indicate a reduction in soybean crushing with a subsequent impact on soybean meal production.

Currently, S&P Global Commodity Insights estimates that Brazil will process 57.50 million tons of soybeans in 2025 and export 23 million tons of soybean meal. In the case of Argentina, the forecasts are 44 million tons and 30 million tons, respectively.

Tags: Brazil, prices, soybean meal