Argentina's temporary lifting of tariffs will increase pressure on world soybean prices and limit Ukraine's export opportunities

Argentina's economic crisis deepened after President Milley's party unexpectedly lost local elections in a key region, Buenos Aires province, ahead of parliamentary elections in October. Investors doubted the president's political stability and his ability to push through radical reforms. Argentina has already used $20 billion in IMF financing this year, and in the past three days, the central bank has been forced to sell more than $1.1 billion of its reserves to stabilize the exchange rate due to the sharp weakening of the peso.

The government of the country on September 22 temporarily (until October 31) abolished large export duties (25-31%) on the export of grain, soybeans and processed products, hoping to increase foreign exchange earnings and stabilize the exchange rate. This will create a large additional supply of soybeans, soybean meal and oil on the world market, to which quotes reacted by falling.

November soybean futures in Chicago fell another 1.5% yesterday to $371.1/t, losing 3.3% in a week (3.3% in a month), and the decline will continue in the coming weeks if there is no progress in trade negotiations between the US and China on the resumption of soybean exports.

Trump's trade war has forced China to increase purchases of soybeans from Brazil and Argentina to replace soybean supplies from the United States.

In the 2024/25 MY, soybean exports from Argentina rose to a 6-year high of 8.81 million tons due to high demand from China, which reduces domestic processing volumes.

According to the grain chamber of exporters and processors CIARA-CEC, in July 31% of enterprises processing soybeans into meal and oil were idle in the country, and now this figure is even higher.

The lack of soybean exports from the US to China increases the supply of cheap American soybeans and soybean meal in other markets, including traditional ones for Ukraine, especially in Europe and Southeast Asia. And the increase in supply from Argentina will further hit Ukrainian exports.

We expect soybean prices in Ukraine to continue to fall amid declining export prices and prices for processors, who will face a sharp increase in the supply of soybeans and soybean meal from Argentina in September and October.