Argentina’s Freeze on Soy Oil Exports Deals Blow to Global Vegetable Oil Supplies

Argentina announced it was suspending export sales of soybean meal and soybean oil. The move compounds a squeeze on global vegetable oil supplies at a time when the war in Ukraine has cut off shipments from that country. 

Worldwide markets had been counting on Argentina, the world’s largest exporter of soybean meal and soybean oil, to help offset shortfalls in vegetable oil supplies from other countries. A recent rebound in Argentina’s soybean production forecast, as shown by Gro’s in-season soybean yield forecast model, focused hopes that Argentina would be able to increase exports. 

But Argentina’s latest move to suspend exports made clear that the country will at best be an  unreliable exporter to the rest of the world. Details of the suspension, which affect the 2021/22 crop, are lacking, and there are suspicions that the suspension could be temporary while Argentina increases its export tax on soybean oil and meal from the current 31%. If true, exports might begin flowing again, but at a higher cost. 

Argentina’s export restriction could force vegetable oil importers to increasingly seek out supplies from other major producers, including the US and Brazil. However, global soybean oil stocks-to-use are at their lowest level in 20 years, and a shift in international trade flows could push edible oil prices higher, raising input costs for food manufacturers and consumers.

CBOT May soybean oil futures are up 30.7% year-to-date while soybean meal prices are up 22%. 

Vegetable oil shipments have been disrupted worldwide. The Russia-Ukraine war has stalled exports of sunflower oil from the region, which accounts for 76% of global sunflower supplies. Indonesia, the largest palm oil producer, has restricted exports. And palm oil production in Malaysia, the No. 2 producer, has been weak for months due to labor shortages and heavy precipitation. 

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