Saturday, 15 Dec 2018

Why Argentina is unbeatable in the world of flours soy

Far from the dream of the Argentineans to repeat the titles of 1978 and 1986, the passage of the local football team by the World Cup of Russia I arrive only until the second round .

But there is a global title that the country revalidated in 2017 and that, for the moment, there are no rivals that threaten to take him out in the medium term: that of the main exporter of soy flours and pellets .

This derivative of “green gold” It is the largest contributor of foreign currency to the country: one in every six dollars that enter exports, counting all the items, is provided only by this by-product that arises when grinding the seeds of the oilseed.

How did Argentina, which as a flour producer is not even on the podium, export almost half of the soybean meal from around the world? Why are the oil fields located on the banks of Paraná one of the three largest agroindustrial poles on the planet? A report of the Rosario Stock Exchange (BCR) details the main factors that explain this phenomenon.


Argentina is the third largest producer of soybeans in the world, and the fourth one of flour, behind China , U.S Y Brazil , with a participation of 13 percent.

But it comfortably leads the export ranking of this by-product, concentrating 43 percent of global trade, and thus surpassing 25 percent of Compartir of Brazil and 18 percent of the United States.

The BCR, based on data from the specialized magazine Oil World, estimates that Argentina will export 28 million tons in the 2017/18 cycle. The leadership is unattainable for its immediate competitors that do not even add up to each other reach that volume: Brazil will sell 15.8 million tons and the United States, 11.2 million, which means 27 million in total.


The main explanation for Argentina’s preponderant role in the global exchange of flours is the size of the domestic market of the other countries, which absorb most of this by-product, while at the local level the exportable balances are very high.

In short, China produces some 73 million tons, which consumes almost in its entirety; The United States produces 42 million and internally demands 75 percent; Brazil produces 33 million and within its borders there is more than half.

In contrast, the annual production in Argentina ranges between 30 million and 33 million tons, against an internal consumption of only four million. That is, more than 80 percent goes abroad.

The answer to why other nations consume so much is not only related to their larger population size but to their export strategies, focused on meats, since flours are used to feed animals.

“All countries producing soybean meal have populations larger than Argentina and have considerable meat and milk production for their powerful domestic markets and for their export strategies. Fortunately for the Argentine trade balance, our internal consumption of soybean meal is reduced and this allows us to generate large foreign currency in exports with this product “, summarizes the document of the Rosario entity.


The role of soybean meal and pellets, as mentioned, is key to sustaining exports and Argentina’s gross domestic product (GDP): only in 2017, 9.4 billion dollars came in, 16 percent of all currencies that entered for foreign trade of primary products and manufactures of both agricultural and industrial origin.

And a relevant fact is that this foreign trade is divided among more than 20 destinations, which avoids the possible inconvenience that can arise when a market is concentrated in a single customer and this, for some reason, decides to cut purchases.

“Our country has a very atomized demand for this product. No buyer country exceeds 13 percent of total exports. This is very good to face any seasonal variation in the international demand for this product, “remarks the Rosario Stock Exchange.

All of the above is the basis for why, in just 20 years, the Argentine oleaginous industrial complex consolidated itself as the third largest in the world.

In total, 55 factories with a theoretical capacity of soybeans and sunflower mills of 202,800 tons per day are currently operating in the country, of which 78 percent are in the Gran Rosario. There are 20 plants, of which 12 have port terminals attached to the Paraná River, which can grind 158,750 tons per day.

The total Argentine capacity exceeds that of Brazil and is just below that of the United States (205 thousand tons per day). In China, they can grind up to 360 thousand.

PORTS  In the Gran Rosario there are 20 factories that industrialize soybeans and 12 have their own port.  (Chamber of the Oil Industry)

PORTS In the Gran Rosario there are 20 factories that industrialize soybeans and 12 have their own port. (Chamber of the Oil Industry)

The final data provided by the BCR is eloquent: “There is no other port node in the world from which so many soy flour / pellets are dispatched abroad as the Gran Rosario. In 2016, about 29.6 million tons of soybean meal were shipped from the 19 ports of the Gran Rosario. The second place corresponded to the port node of New Orleans in the Gulf of Mexico (United States) with 4.9 million; and the third one to Santos (Brazil) with 4.8 million. The port development to export this product has been remarkable in Argentina with modern technology and high efficiency “.

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