Tariff reduction in Argentina and improved crop conditions in the US continue to pressure soybean quotes

Soybean prices remain under pressure from improved crop conditions in the US and increasing supplies from Brazil and Argentina.

Argentine President Milley announced a reduction in export duties on some types of agricultural products in order to stimulate the agricultural sector (which he promised during the 2023 election campaign and has already reduced duties, which then increased again).

In particular, it is planned to reduce duties:

• for soybeans – from 33% to 26%,
• poultry and beef — from 6.75% to 5%,
• sunflower — from 7.5% to 5.5%,
• corn and sorghum - from 12% to 9.5%,
• soybean meal and oil — from 31% to 24.5%.

September soybean futures on the Chicago Board of Trade yesterday fell 1% to $371.7/t (-1.5% month-on-month) under pressure from uncertainty over exports in the new season due to an unsigned trade agreement with China.

According to the USDA report, during July 22-27, the number of soybean crops in the US in good or excellent condition increased by 2% to 70% (67% a year ago). Soybean exports from the US in the period July 18-24 increased by 8.7% compared to the previous week to 409.7 thousand tons, and in total in the 2024/25 MY amounted to 47.2 million tons, which is 10.4% ahead of the pace of the last season.

The US and the EU have announced the framework for a trade deal that includes a 15% US tariff on most EU goods, a reduction in EU tariffs on some US agricultural goods, and the purchase of US energy products worth $750 billion over 3 years. But European demand for US soybeans will not replace demand from China, so the deal will not affect US markets.

According to the forecast of the Brazilian National Association of Grain Exporters (ANEC), soybean exports in July will amount to 12.11 million tons, which will exceed the figure of July 2024 (9.6 million tons) by 26%, and the export rate will remain high due to record soybean production in Brazil in the 2024/25 MY and plans to increase the sowing area by 2-3% in the new season.

In Ukraine, at the end of the season, export prices for soybeans remain at the level of 18,200-18,400 UAH/t or $385-390/t, but subject to prompt delivery to the port due to the expectation of the introduction of export duties from August 1 or September 1.

Precipitation improves the condition of crops and the prospects for the soybean harvest in Ukraine, so under the pressure of world quotes and duties, prices at the start of the season will drop to $360-370/t with delivery to ports.