Climate Crises Propel Argentina to Boost Soybean Oil Imports

Buenos Aires: The severe effects of the unprecedented drought on Argentina's 2022-23 harvest have led to expectations that Soybean Oil imports will more than double this season. Argentina is the world's top supplier of Soybean Oil and meal thanks to a robust grain processing sector that can crush up to 72 million tonnes of the oilseed annually. Nevertheless, significant losses from the drought are highlighting the need for imports from Paraguay and Brazil.

On the back of a harvest of barely 26 million tonnes, down from a prior crop of 42.3 million tonnes, the exchange forecasts that Argentina will import 7.8 million tonnes of Soybean Oil and meals this season, up 138.5% from the previous season. In addition to the significant supply from Paraguay, Brazil has emerged in this first half of the year as a growing source of Soybean Oil for the Argentina oil sector. The Rosario grains exchange noted that over 390,000 tonnes of Soybean Oil and meals were imported by Argentine companies in the first two months of 2023, including over 150,000 tonnes from Brazil so far in March. The sector is in crisis and functioning at the lowest capacity in history, according to CIARA's president, who made this statement last week.

Data from the national weather service show that temperatures in Argentina between November 2022 and January 2023 were the highest since 1961. A series of La Nina weather events caused the drought to start in 2019 and worsen in 2022. Moreover, in the fourth quarter of 2022, Argentina experienced its lowest rainfall in four decades. Argentina's Soybean crushing fell into multi-year lows in 2022–2023 as its drought-stricken local produce becomes increasingly unable to meet manufacturers' demand, with a number of factories already halting operations in anticipation of imports of Soybean Oil from Paraguay and Brazil.

According to the ChemAnalyst database, if there is an interruption in supply from its key exporting countries, the price of Soybean Oil will rise even more in the next month in the domestic market of Argentina.