A Brazilian trade group representing global grain traders on Thursday confirmed "atypical" sales of Brazilian soybeans to Argentina, following rumors about unusual cargo being ordered at this time of year. Anec, which represents companies such as Cargill and Bunge (BG. N), said the Brazilian supply is necessary after a wave of Argentine soybean sales driven by the government program "soybean dollar" in the last quarter of the year, which exhausted local stocks.

Sergio Mendes, director general of Anec, said in an interview that the business was driven by the expectation that a brutal drought will reduce Argentina's domestic soybean production by 2023. that will import "much larger" volumes from Brazil this year, he said.

The soy dollar program's policy aims to encourage exports, as many Argentines fear an even greater weakening of the local currency amid sky-high inflation, leading some farmers to keep soybeans stored rather than selling it under unfavorable conditions. Mendes said he confirmed the inopportune reservations with members of the association, refusing to provide details on who is organizing the ongoing negotiations.

Fernando Muraro, an analyst at AgRural, estimates Brazilian soybean sales of 200,000 to 300,000 tons to Argentina for delivery in February and March. "It is interesting to note that these deals have changed the export awards of Brazil and Paraguay," said Muraro of AgRural. "They went up."

Milling margins in Argentina rose $10 per tonne in early January to $30, making soybean imports from Brazil an attractive option during the peak of argentina's soybean off-season, Muraro added.

Last year, the first shipments of Brazilian soybeans to Argentina were recorded in April, with a batch of almost 49,000 tons, according to Brazilian trade data.

As of November, total imports from Argentina to Brazil were 289,500 tons, according to the data.

Argentina, the world's largest exporter of oil and soybean meal, will begin harvesting its new soybean crop in April. Farmers are expected to harvest only about 37 million tons, down from 49 million tons previously forecast, as the country faces its worst drought in 60 years.

Source: Agrolink