Soybean prices plummet to $350 a tonne due to higher US production

Soybeans, which emerged as a crucial raw material for the economies of Argentina, Bolivia, Brazil, Paraguay and Uruguay with the rise of the Chinese economy in the late 1990s and early 2000s, are now facing a serious crisis. The sustained collapse in the prices of this oilseed It is severely affecting the current accounts of these countries, whose income depends largely on their agricultural exports.

According to Bloomberg, on Monday, August 12, the situation was further aggravated when the United States Department of Agriculture (USDA) confirmed forecasts of high soybean production in that country. This news immediately impacted prices on the Chicago market, which were already showing a downward trend. deepening the fall until breaking through the September contractwhich stood at US$360 per tonne, an alarmingly low level.

This decline is due, in part, to a US agricultural campaign which has had ideal weather conditionswhich could lead to a record yield. In addition, other factors have been putting downward pressure on soybean prices, including the slowdown of the Chinese economyhigh stock levels and positive production prospects globally. As a result, soybean futures have fallen to their lowest levels since September 2020.

Soybean exporters in Latin America are caught at a crossroads. On the one hand, they face an oversupply driven by US production, and on the other hand, a weakening demand in China, the world’s largest buyer of soybeans. These two forces combined have led to a drastic reduction in prices, negatively affecting the incomes of producers and the economies of these countries.

In 2012, Soybeans hit a record high of $650 per tonwhich adjusted for US inflation would be equivalent to about $900 today. However, the recent drop in prices reflects a very different scenario. According to a report by the Argentine consultancy Delphos Investment, projections for the US crop of Soybeans and corn suggest a historical record level, which worsens the stock/consumption ratio and puts even more downward pressure on prices.

Far from stabilizing, The fall continues, and in the early hours of Tuesday, August 13, 2024September futures are trading at $350 per metric ton.

According to consolidated data for 2023, Brazil remains the world’s leading soybean exporteraccounting for 57.6% of global exports. The United States follows in second place with 30.3%, followed by Paraguay (3.7%), Canada (2.8%), Ukraine (1.4%), Argentina (1.1%), Uruguay (0.4%), South Africa (0.4%), Netherlands (0.2%), Nigeria (0.3%) and Bolivia (0.2%)Strong international competition and fluctuations in global demand, particularly from China, make the future of this market increasingly uncertain.