Argentine Drought Spikes Soybean Meal Prices

As dry weather reduces Argentine soybean production, soybean meal futures prices have been impacted the most. This week, Chicago soybean meal futures prices increased by as much as 14% while prices for raw soybeans only increased 5%. Soybean oil and raw soybeans have many substitutes in today’s market and huge volumes produced out of the US and Brazil keep prices competitive. However, alternatives for Argentine soybean meal are limited largely due to the country’s heavy investment in soybean crushing and port capacity. In 2017, the International Finance Corporation and Rabobank invested $410 million in Argentina’s crushing capacity, further expanding Argentina’s staggering 45% market share of soybean meal and oil export capacity. As global soybean oil and meal production becomes more consolidated in the region, yield-limiting weather events can unevenly impact value-added products due to the regional dynamics in Argentina’s soybean supply chain. Gro Intelligence provides subscribers with the data and analytics needed to anticipate commodity price fluctuations due to extreme weather events.