South American Soy Meal Firms
- South American meal offers firmed $4 and were pulled entirely in Argentina a few times last week.
- Soy processors are struggling with bean movement and some crush facilities are offline.
- The Argentine government cancelled the plan to nationalize bankrupt Vicentin, a huge soy processor, keeping them offline for longer.
- Two other Argentine crush plants are resuming operations after positive coronavirus tests shut them down earlier in the week.
- There has been no confirmation from the Argentine government whether the export tax differential between beans and products will be reinstated.
- This would imply the government would lower export taxes on products from the current 30%.
FBN’s Take On What It Means: The Argentine government originally planned to appoint managers to Vicentin. However, a judge stopped the government-appointed managers from acting as more than observers. Though Argentina’s Agricultural Ministry has said taxes won’t be increased, it’s doubtful the government can give up that revenue as meal processing is a relatively large part of the economy. Meal’s reaction in the US to the South American tightness has been subdued so far, but that could change if crushers slow plants further, which would help to support prices.
Brazil On Pace For Record Wheat Crop
- Brazil’s wheat crop could reach 7.34 million tonnes according to analyst Trigo & Farinhas.
- This compares with the most recent Conab forecast of 6.31 million tonnes and is above last year’s 5.15 million tonnes.
- The previous record of 6.7 million tonnes was reached in 2016.
- Brazil is a large importer of wheat, needing around 12 million tonnes to meet demand and usually growing at best half of that volume.
- Argentina is Brazil’s main supplier of wheat imports.
- Conab last projected Brazil wheat imports for this year at 7.3 million tonnes.
FBN’s Take On What It Means: Brazilian producers have had a very profitable year in soybeans and have invested more in the upcoming wheat crop, which is expected to increase yields. So far this season, conditions have been very good and harvest will start later this month. Brazil imports most of its wheat from Argentina, but has recently booked some Russian origin supplies with tariff relief. Decreased demand from Brazil could continue to suppress world prices.
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