Argentina is the world’s third largest soybean producer and is incredibly important to the global oilseed trade. Unlike many other countries, Argentina does not export the beans themselves. Most of the Argentina soybean production is exported as meal and other byproducts, as can be seen in the chart below.
From a crop production perspective, Argentina has two soybean crops each year. The first crop is planted in early November and harvest begins in Early March. This crop represents roughly 75% of their total soybean production.
The second soybean crop in Argentina is planted shortly after the first crop, starting around the beginning of December, and is harvested starting in the middle of April. The second soybean crop represents roughly 25% of their production.
Due to the outsized impact on global export markets, soybean and soybean product futures markets will look towards both Brazil and Argentina during the months of January through March for an indication of their weather patterns. The idea here is to get a sense for whether of both countries are going to have large crops and will be able to maintain, or increase, their export share for the upcoming year. The world focuses on Brazil for soybean price direction and Argentina for soybean meal price direction.
2022/23 Argentina Soybean Production Market Impacts
To get a better understanding of the impacts, let’s look at late 2022 into early 2023 as an example. Going into the fall, the weather in Argentina was dry. At first, the market perceived this as more of a wheat issue as the wheat crop was entering its final stages and weeks away from being harvested.
Then, the weather didn’t improve. Slowly but surely, the market began to transition its focus from wheat to the impact on their corn and bean crops. Over a few short weeks, this drive soybean meal prices about 20% higher and created a record long fund position in soybean meal. At the same time, it created about a $1.00/bu premium in the soybean market as well.