Soybean oil production, which is one of Argentina's largest currency generators, is on high alert, at risk of losing its main buyer. That's because the United States has already announced that it will progressively increase domestic oilseed processing to meet growing demand for biodiesel production. 

"Most of the currencies generated by Argentina come from the agro-industrial sector in general and from the soybean complex in particular. But this activity is at risk and, by extension, the whole of Argentina as well" since the neighboring country is "consumed by internal political issues," says the specialized portal Valor Soja.

This week, AcSoja, the entity that groups the Argentine soybean chain, held a virtual event to try to warn about the severity of the issue. "Argentina will find that the U.S. will enter the soybean meal market en masse to compete aggressively," said Ivo Sarjanovic, former president of Alvean (joint venture between Cargill and Copersucar) and current professor of the Master's degree in Finance at Tortuato Di Tella University.

The expert warned that in the face of lower exportable supply of soybeans in the U.S., Chinese demand would start to push harder to originate grain in South America: "The threat is twofold, because the soybean meal market will be lost and more lower added value grains will be exported," Sarjanovic said.

In the last year, Brazil has also significantly increased its domestic processing to take advantage of the high international prices of soybean oil. "In the last twelve years we have lost part of the train with the stagnation of soybean production in Argentina, but what comes ahead is the most critical that the country will face in the coming years. If we do nothing, at some point we can become mere exporters of raw materials with all that this implies in the commercial dynamics", warned Fernando Correa Urquiza, regional director of the oilseed area of Louis Dreyfus Company (LDC).

According to Valor Soja, the problem, "although serious, is so absent from the work agenda of the national government that it is not even part of bilateral negotiations with the U.S. to rehabilitate the possibility of exporting biodiesel to that market, which is not feasible since 2017 due to trade barriers implemented during Donald Trump's administration."

Source: Agrolink