Despite harvest delay in Argentina, soybean prices remain under pressure from weak demand from China

Rains fell in most agricultural regions of Argentina last week, which delayed the harvesting of soybeans and corn, but improved the conditions for sowing winter wheat. This week, the intensity of precipitation will decrease, which will allow to speed up harvesting.

May soybean futures on the Chicago Stock Exchange rose 0.9% to $426/t yesterday amid delays in soybean shipments from Argentina, but remain under pressure from reduced demand from China.

According to data from the Buenos Aires Grain Exchange BAGE, as of April 17, soybeans in Argentina were harvested on 13.9% of the area (35.9% on average over 5 years), and corn - on 17.2%, with the average yield reaching 8.79 t/ha.

As a result of the rains, the fields were flooded with cicadas, which spread corn diseases. Against this background, the exchange in Rosario BGR reduced the forecast of the corn harvest by 6.5 million tons to 50.5 million tons, and the exchange in Buenos Aires - to 49.5 million tons. Forecasts may decrease again, because so far it has not been possible to overcome the disease. Currently, damage from cicadas is estimated at $1.268 billion.

A delayed harvest in Argentina is keeping soybean and corn prices from falling, driven by lower demand from China due to reduced pork consumption.

In the 1st quarter, compared to the same period last year, China reduced soybean imports from the USA by 50% to 7.14 million tons, and increased supplies from Brazil by 155% to 9.99 million tons. At the same time, in March, against the background of high prices and due to low demand from pig farmers, soybean imports decreased (compared to March 2023) to a 4-year low of 5.54 million tons, in particular from the USA - almost doubled to 2.18 million tons, while from Brazil it increased by 81% to 3 .02 million tons.

Also in March, China reduced (compared to February) supplies of corn from the USA by 78% to 109.7 thousand tons, as buyers preferred cheap corn from Brazil, whose imports increased by 72% to 1.18 million tons.

In 2023/24, the United States of America exported 38.488 million tons of soybeans, which is 18.2% lower than last year's pace. At the same time, the rate of soybean sowing in the US is twice the 5-year average and reached 8% as of April 21, which will increase the pressure on quotations in the near future.