reply Argentina's soybean production cuts may affect global supply and demand

Global oilseed crops are an important part of the food supply chain and the various types of soybean meal from oilseed crop crushing are an important component in the feeding of livestock and some aquatic animals, and are an important source of protein in the food chain. As a major oilseed crop in international trade, soybeans are favoured for their excellent growing, transport, storage and crushing and processing qualities, and Argentina is an important participant in the global soybean market. Argentina's soybeans play an important role in the international trade of commodities, influencing the balance of international trade on both the production capacity and market demand sides.In 2022/23, Argentina suffered a severe impact of dry weather, which significantly reduced soybean production. In fact, Argentina, located in the southern hemisphere, has a marketing period for its soybeans that runs from October of the first year to September of the second. Soybean production in Argentina has continued to decrease over the last three marketing years and the USDA estimates that 2022/23 will see a 14-year low in Argentina (33 million tonnes). Argentina's Rosario Grain Exchange is even more pessimistic, lowering its production forecast to 27 million tonnes, the lowest since 2000/01. Crushers, the downstream of soybeans, have reacted in advance, with Argentine domestic crushing capacity also falling to its lowest level in 10 years. The decline in both Argentine soybean capacity and crushing capacity is expected to have a modest impact on global trade in soybeans, protein meals and vegetable oils in the coming months.To ease tight domestic soybean supplies, Argentina's soybean imports for 2022/23 reached a record high of 7.3 million tonnes, ranking second globally after China. Argentina's main sources of soybean importers, however, are Brazil and Paraguay. Brazil's record soybean production last year roughly made up the shortfall in Argentina's declining soybean production. However, the impact of the decline in Argentine soybean production can still be observed, both in total and in relation to flows and structures. Total global trade in soybeans and their related products fell last year due to the impact of Argentina. In particular, trade in soybean meal fell by 1 million tonnes year-on-year, with a consequent rise in prices and a shift in demand towards other categories of protein meal (e.g. peanuts, rape, sunflower, palm, coconut, cottonseed, etc.). global trade in soybean oil in 2022/23, affected by higher prices in the Argentine and US markets, also fell by more than 2% year-on-year. Argentina's soybean oil exports fell, while Brazil grew rapidly. However, Brazil is likely to increase the percentage of soybean oil mandatorily added to biofuels in March. An increase from the current 10% would affect the amount of soybean oil available for export, which in turn would force importers from various countries to rely more on other varieties of vegetable oil.Soybeans are the main oil crop imported into China and the impact of changes in the related international trade supply and demand on the Chinese market is a cause for concern. Customs data show that in 2022, China imported US$1.07 billion of non-GM yellow soybeans, with imports of 1.69 million tonnes. In comparison, imports of GM yellow soybeans in that year amounted to US$60.16 billion, with imports of 89.389 million tonnes. On a unit price basis, imports of GM yellow soybeans in that year were US$0.67 per kg, 4 cents higher than non-GM yellow soybeans. China's import sources of non-GM soybeans in 2022 are widely distributed, amounting to nine. Of these, imports from Russia, the United States, Benin and Canada accounted for the highest share, at 35.8%, 28.2%, 16.1% and 13.3% respectively. The unit price of non-GM soybeans from Russia averaged 0.55 cents per kg, 4.7 cents lower than that of the USA. The main sources of imports of GM yellow soybeans were Brazil and the US, accounting for 62.0% and 31.3% of the year's imports respectively, while the unit price of Brazilian GM yellow soybeans was 3.9 cents per kg higher than that of the US.Although China's direct imports from Argentina are all GM soybeans and small in terms of import sources (only 4.0% of imports in 2022), the impact of reduced soybean production in Argentina cannot be ignored. In terms of unit price, Argentine soybeans are imported at US$0.66 per kg, 2.5 cents less than Brazilian soybeans. The cattle industry, a traditionally important industry in Argentina, has also maintained rapid growth in recent years, driving a sustained increase in domestic demand for soybean meal in Argentina. As members of Mercosur, Brazil, Argentina, Uruguay and Paraguay are all major producers of soybeans, and trade between the countries is not greatly affected by tariffs. Argentine domestic crushing demand will shift to other Mercosur members, which in turn will amplify the impact on global trade. The crushing sector is also capital intensive, with large processing conglomerates not only reducing average costs through scale processing, but also extending their upstream production, logistics and warehousing and downstream distribution networks. The rapid development of the digital economy has further strengthened the market influence of large crushing companies, leaving small and medium-sized crushing companies with more squeezed space to survive. To ensure its own food security, China needs to consider international collaboration on biodiversity while stabilising its supply chain and maintaining a good competitive ecosystem for the industry. It is important to discuss with relevant stakeholders in the supply chain a reasonable model for sustainable development, to maintain the economic viability of economic and trade cooperation and stable benefits for participants, but also to promote more responsible and rational cultivation by all parties, to avoid irreparable damage to the ecological environment caused by economic activities, and to prevent and reduce the risk of damage and impact on the global ecological environment caused by the monoculture of plant species.