China’s soybean meal market remains out of reach for Argentina despite first shipment

The city of San Lorenzo, Argentina’s biggest grain hub on the banks of the Parana River, is preparing to send a major cargo to China: the first ever shipment of about 30,000 tonnes of soybean meal from the world’s biggest animal feed exporter.

The shipment, reported by Reuters on Monday, has sent waves through the sector. It will for the first time link the world’s biggest supplier with its biggest customer, which grinds almost all its own meal for its vast pig herd and imports very little.

But analysts warned that the cargo was a drop in the bucket for China and there were major hurdles before it could turn into a meaningful trade. Still, it was a positive move since Beijing approved imports of Argentine food in 2019.

“If they are buying from Argentina, it’s a good sign,” analyst Lorena D’Angelo, based in the agricultural hub of Rosario, told Reuters. “But it’s more about politics than the market.”

China, locked in a trade war with the top soybean supplier, the United States, is looking to diversify its supply options, but that could change quickly depending on trade talks. China also has huge crushing capacity and is strongly in favor of crushing its own soybeans rather than buying finished meal.

“I don’t see it becoming a major market this year,” D’Angelo said, adding that China has imported a total of just 50,000 tonnes of soybean meal in recent years. By comparison, China imports more than 100 million tonnes of uncrushed soybeans a year.

WILL TRADE OPEN?

Julio Calzada, director of economic research at the BCR grain exchange in Rosario, also cautioned caution. Calzada noted that China’s annual soybean crushing capacity is 153.5 million tonnes, more than double Argentina’s.

“There are doubts in the sector about the future likelihood of Argentina continuing to supply soybean meal to China, given that China has many crushing plants,” he said.

Argentina shipped a total of 27.2 million tonnes of soybean meal last year, worth about $10.55 billion, although its cost-effective crushing plants along the Parana River face increasing competition from Brazil and the United States.

The country’s Chamber of Grain Exporters and Mills on Monday noted the expected arrival in mid-July of the cargo ship NORDTAJO, jointly operated by Bunge and local firm AGD, at Terminal 6 in San Lorenzo.

The vessel will carry the first shipment of Argentine soybean meal to China, likely arriving in September. In the local industry, people are still waiting with hope to see if the cargo will actually be cleared by Chinese customs.

“This is a very important shipment… because it implies a real and effective opening of trade,” CIARA-CEC President Gustavo Idigoras told Reuters. “This should ensure a constant flow in the future.”

Tags: China, soybean meal, Argentina