Argentina soybean replacement costs eclipse FOB levels

Prices for Argentinian soybeans at the farm are now trading higher than for export as demand for Argentinian beans for May and June export remains limited while crush margins remain relatively high, according to market sources.

Tradable value for May shipment soybeans was last indicated at 35 c/bu over May futures on Friday, up 1 c/bu on Thursday’s assessment, while offers from farmers on the domestic market were indicated no lower than 45 c/bu with highest offers standing at 60 c/bu.

On a flat price basis, this equates to replacement costs being $4-9/mt more expensive than export values, meaning exports from Argentina may be unseasonably low.

“These last three years, we have seen the export sector having more buying power than the crush due to the trade war with China, but not anymore,” an Argentina-based broker told Agricensus.

Argentine crush margins for May were $34.50/mt on Thursday, the highest level since May last year amid a spike in oil and meal prices for May shipment at the end of last week and falling soybean prices this week.

Expectations are that demand will remain stronger in Argentina’s domestic market as Brazil continues to take the lion’s share of exports.

“Brazil is exporting a crazy volume of soybeans and that country is taking all the demand with enough soybeans [there] not to put pressure on Argentina’s export basis.  Maybe we need to wait for Brazil’s supply to dry up in order to push the FOB basis up until export margins reappear,” another Argentina-based broker told Agricensus.