South American soybean meal basis hits three-month high

Soybean meal port differentials in South America have strengthened over the past few days, reaching their highest level since December 2024.

On March 20, Platts, part of S&P Global Commodity Insights, assessed the Brazilian FOB Paranaguá basis for shipment in May at a $7/st premium to the Chicago Board of Trade futures, after reaching $8/st on March 19, the highest for a spot delivery since Dec. 13, 2024.

In Argentina, the FOB Up River premium for May stood at $2/st over the CBOT on March 20, the highest value for a front-month loading since Dec. 19, 2024, according to Platts data.

Brazil and Argentina are global leaders in exporting soybean meal. The strengthening of port differentials from these origins occurs at a time when the trend would typically be downward pressure on them due to harvests in these countries.

The escalation of tensions in global trade, particularly involving the US, China, and the EU, partially accounts for this scenario, market participants said.

In summary, China is expected to increase its purchases of South American soybeans instead of US soybeans, following the retaliatory tariffs imposed by Beijing on US goods. Additionally, the EU is likely to increase its imports of soybean meal from both Argentina and Brazil due to similar trade disputes.

As for outright prices, the FOB Paranaguá value was assessed March 20 at $335.21/mt and the FOB Up River at $329.70/mt, both for May loading and still hovering lows since mid-2020, the Platts data showed.

Domestic issues

Local factors have also led to the strengthening of South American soybean meal export premiums in recent days.

In Brazil, the appreciation of the Real against the US dollar has caused producer sales to retract, clouding the supply outlook for crushing in the short term.

In Argentina, uncertainties remain regarding strike movements and the local soybean crop itself. After erratic development due to hot and dry weather conditions, harvesting is set to begin in the coming days.

On March 20, for example, the Buenos Aires Grain Exchange, or BAGE, cut its forecast for Argentine soybean production this year by 1 million mt to 48.60 million mt.

“High temperatures and water deficit during the crop cycle in the north have negatively impacted yields,” BAGE said in a weekly report.

For now, Commodity Insights projects that Argentina will produce 48.50 million mt of soybeans in the 2024-25 cycle, compared with 48.21 million mt last year.

Tags: Brazil, prices, soybean meal, Argentina