World Grain - February 2019 - 68

FEATURE: POSITIVE OUTLOOK FOR ARGENTINE AGRIBUSINESS

Argentina's soybean exports and domestic consumption forecast

million tonnes

80
60
40
20
2028/29**

2027/28**

2026/27**

2025/26**

2024/25**

2023/24**

**forecast

2022/23**

2021/22**

2020/21**

Estimated

2019/20**

*

2018/19*

2015/16

Domestic consumption

2016/17

2014/15

2013/14

2012/13

2011/12

68

2010/11

Net exports (exports minus imports)

2009/10

2008/09

2007/08

2006/07

2005/06

2004/05

2003/04

2002/03

2001/02

2000/01

0

Source: USDA, Rabobank 2018

portant footprint in the global soymeal market.
"This is due to the rising demand for international
trade, mainly in countries where Argentina already
has a high market share, and the positioning of the
Argentine crushing industry, which is close to producing areas and exporting ports," Ikeda and Fontes said.

"Belgrano Plan" was concluded in 2018, with the installation of 500 kilometers of a 1,200-kilometer railway from Salta to Rosario.
"This plan aims to cut both the transit time and cost
of moving export products from the northern areas in
Argentina to the Port of Rosario," he said.

HIGHLY COMPETITIVE PRODUCERS
Ikeda noted that Argentine soybean farmers are extremely competitive in terms of costs when compared to
its biggest competitors - the United States and Brazil.
Given the high soil fertility as well as crop rotation systems, Argentine farmers have low expenditures for fertilizers in the primary soybean production areas (north
of Buenos Aires and south of Santa Fe) and Salta, where
new soybean growing areas have emerged, he said.
"Climate conditions during the winter reduce pest
and disease pressures, lowering the agrochemical needs
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different from Brazil and more similar to the U.S."
He said another difference between Argentina soybean farmers and their main rivals is that most of
their operations, especially harvest, are executed by
third-party service providers, which results in lower
¿[HG FRVWV EXW KLJKHU RSHUDWLRQDO FRVWV RQ PDFKLQery operations.
One of the country's biggest competitive advantages
is geographical, as almost 60% of soybean production
takes place 300 kilometers or less from the Rosario region, where the main ports and 80% of total crushing
capacity in Argentina are located, Ikeda noted.
"Consequently, fobbing costs in the traditional proGXFLQJ UHJLRQ LQ $UJHQWLQD DOVR EHQH¿W IURP WKHVH
relatively short distances, even considering that almost 80% of Argentine grain transportation is done by
trucks," he said.
The reliance on trucks to ship grain should be lessHQHG E\  ,NHGD QRWHG DV WKH ¿UVW SKDVH RI WKH

ACREAGE EXPANSION
7KHLQWHQVL¿FDWLRQRIFDWWOHV\VWHPVPD\UHVXOWLQSDVturelands being converted into crop areas in the coming
years, Ikeda said. Because of this, Rabobank expects
soybean acreage to increase by 20% over the next decade, while production is forecast to rise by 17%.
He said most of the expansion over the next decade will
take place in the traditional soybean area close to Rosario,
and there's also potential to trigger some soybean acreage
expansion through the northern areas such as Salta.
"However, improvements in logistics, as well as high
international soybean prices, will be required to offset
the impacts of both transportation costs and export taxes on local prices in northern Argentina," he said.
CRUSHING INDUSTRY TO EXPAND
Ikeda said he expects the country's soybean crushing
industry to lead the increase in Argentine soybean demand by 24% to 59.2 million tonnes in 2027-28, while
soybean net exports are expected to stay in a range of 8
million to 9 million tonnes over the next 10 years.
The new Argentine export tax for the soy complex has
reduced the tax differential between soybeans and its
SURGXFWZKLFKSUHYLRXVO\EHQH¿WHGH[SRUWVRIPHDODQG
oil and is now adding pressure on Argentine crushing
margins, he said.
In the short term, he also noted that the trade dispute between the United States and China, which has resulted in
an additional 25% duty on U.S. soybeans entering China,
has driven up Chinese demand for Argentine soybeans.
"As long as this trade dispute continues, it is likely
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World Grain - February 2019

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