Argentina Soybean Stocks: Looking at the Big Picture

This month, USDA’s production estimate for Argentina’s 2017/18 soybean crop was reduced 7.0
million metric tons, with accompanying reductions in trade, crush, and stocks. However, USDA
forecasts soybean carry-in stocks on April 1 to reach a record 18.4 million tons, which will limit
the impact of the lower crop forecast. Ending stocks for March 31, 2019 are lowered 2.4 million
tons to 13.5 million.
Dissenting opinions from USDA’s estimate of Argentina’s soybean stock have suggested the
beginning stock estimate is overly optimistic. However, with final and reported data on trade and
crush, and using publicly available production estimates, the balance sheet is left with little
flexibility in adjusting stocks lower than the current level. While anectodal evidence has
suggested a higher domestic use or inflated trade numbers, which would lead to a lower stock
estimate, these reports are unverifiable and have not been incorporated in USDA official
There also exists economic incentives for Argentine soybean stocks to grow. Past economic and
agricultural policies in Argentina have culminated in rising soybean production and stockbuilding.
Macroeconomic conditions such as high inflation, policy uncertainty, and an artificially
strong peso had discouraged farmers from actively engaging in the global market. As a hedge in
such an environment, tradeable commodities have been held on-farm, especially by small- and
medium-sized growers. These dynamics provide support to USDA’s estimate of Argentina
soybean stocks, which are currently forecast at 34 percent of 2017/18 disappearance. In comparison, Brazilian stocks over the last 5 years have been relatively low, averaging 1.5 percent of disappearance with a current carry-over into 2018 of less than 1.0 percent.

Fuente: USDA

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