Global oil crops are an important component of the food supply chain. Various types of soybean meal extracted from oil crops are an important component of raising livestock and some aquatic animals, and are an important source of protein in the food chain. As a major oil crop in international trade, soybeans are favored for their excellent planting, transportation, storage, and processing qualities, while Argentina is an important participant in the global soybean market. In the international trade of bulk commodities, Argentine soybeans play an important role, affecting the balance of international trade both in terms of production capacity and market demand.
In 2022/23, Argentina was severely affected by dry weather, resulting in a significant decrease in soybean production. In fact, Argentina, located in the southern hemisphere, has a soybean sales period from October of the first year to September of the second year. Argentina's soybean production has continued to decline in the past three sales years. The US Department of Agriculture estimates that Argentina's soybean production in 2022/23 will hit a 14-year low (33 million tons). Argentina's Rosario Grain Exchange was even more pessimistic, reducing its production forecast to 27 million tons, the lowest level since 2000/01. As the downstream of soybeans, pressing companies have responded in advance, and Argentina's domestic pressing capacity has also dropped to its lowest level in 10 years. The decline in Argentine soybean production capacity and crushing capacity is expected to have a significant impact on global soybean, protein meal, and vegetable oil trade in the coming months.
In order to alleviate the shortage of domestic soybean supply, Argentina's soybean import volume reached 7.3 million tons in 2022/23, setting a record high, second only to China and ranking second in the world. The main sources of Argentine soybean importers are Brazil and Paraguay. Brazil's soybean production set a record last year, largely making up for the shortfall in Argentina's soybean production decline. However, the impact of the decline in Argentine soybean production can still be observed, both in terms of total volume, flow direction, and structure. Affected by Argentina, the total trade volume of global soybeans and related products decreased last year. Among them, the soybean meal trade decreased by 1 million tons year-on-year, with the price rising. Moreover, some demand has shifted to other categories of protein meal (such as peanut, rapeseed, sunflower seeds, palm, coconut, cottonseed, etc.). The global soybean oil trade in 2022/23 also decreased by more than 2% year-on-year due to the impact of rising prices in Argentina and the United States. Argentina's soybean oil exports have declined, while Brazil has experienced rapid growth. However, Brazil may increase the mandatory addition of soybean oil to biofuels in March. If there is an increase from the current 10%, the amount of soybean oil available for export will be affected, making importers in various countries have to rely more on other varieties of vegetable oil.
Soybean is the main oil crop imported by China, and the impact of changes in the supply and demand relationship of relevant international trade on the Chinese market deserves attention. According to customs data, in 2022, China imported 1.07 billion US dollars of non genetically modified yellow soybeans, with an import volume of 1.69 million tons. In comparison, the import of genetically modified yellow soybeans that year reached US $601.6 billion, with an import volume of 89.389 million tons. According to unit price calculation, the imported genetically modified yellow soybeans in that year were $0.67 per kilogram, 4 cents higher than non genetically modified yellow soybeans. In 2022, China's imports of non genetically modified soybeans were widely distributed, reaching 9 countries. Among them, imports from Russia, the United States, Benin, and Canada accounted for the highest proportion, with 35.8%, 28.2%, 16.1%, and 13.3%, respectively. The average unit price of non GM soybeans in Russia is 0.55 cents per kilogram, which is 4.7 cents lower than that in the United States. The main importing countries of genetically modified soybean are Brazil and the United States, accounting for 62.0% and 31.3% of the import volume of that year, respectively. However, the unit price of genetically modified soybean in Brazil is 3.9 cents higher than that of the United States per kilogram.
Although from the perspective of import sources, China's direct imports of soybeans from Argentina are all genetically modified soybeans and the quantity is small (the proportion of imports in 2022 was only 4.0%), the impact of Argentina's soybean production reduction cannot be ignored. In terms of unit price, the import unit price of Argentine soybeans is US $0.66 per kilogram, 2.5 cents lower than that of Brazilian soybeans. As a traditional and important industry in Argentina, the cattle industry has also maintained rapid growth in recent years, driving the continuous increase in the domestic demand for soybean meal in Argentina. As members of the Southern Common Market, Brazil, Argentina, Uruguay, and Paraguay are all major producers of soybeans, and trade between countries is not significantly affected by tariffs. Argentina's domestic crushing demand will shift to other MERCOSUR members, amplifying the impact on global trade. The pressing industry is also capital intensive. Large processing enterprise groups not only reduce average costs through large-scale processing, but also continuously extend their upstream production, logistics and warehousing, and downstream sales networks. The rapid development of the digital economy has further strengthened the market influence of large pressing enterprises, making the survival space of small and medium-sized pressing enterprises face more pressure. To ensure its own food security, China needs to consider international collaboration on biodiversity while stabilizing its supply chain and maintaining a good ecological environment for industrial competition. It is necessary to discuss with relevant stakeholders in the supply chain a reasonable model for sustainable development, maintain the economic viability of economic and trade cooperation and the stable benefits of participants, and promote all parties to be more responsible and rational in planting, avoid irreparable damage to the ecological environment caused by economic activities, and prevent and reduce the risk of damage and impact of plant species diversity on the global ecological environment. (The author is a researcher at the Research Institute of the Ministry of Commerce)
