Uruguayan soybean exports: why 2022 could be a record year

RIO DE JANEIRO, BRAZIL – High prices in the Chicago market and expectations of above-average yields largely explain the prospects of the Uruguayan government and producers that soybean will have an exceptional year in 2022, with a level of exports located in the vicinity of the agricultural boom between 2013 and 2014.

The expected production of close to three million tons and the expected average value in the vicinity of US$600 per ton allow Uruguay to expect revenues above US$1.6 billion in soybean exports. The figure marks an 80% increase over the US$892 million of 2021, exceeds the US$1.6 billion of 2014, and is only below the US$1.9 billion outlook of 2013. And, should the price continue to rise amid international volatility, it could break the record of nine years ago.

The larger planted area and the improvement in yield per hectare make it possible to project production of close to three million tons in 2022. Meanwhile, expectations of a cut in soybean production in the region, such as Argentina and Brazil, as well as sustained demand in China, and low stocks in the United States “keep the international price of soybeans up since December 2021”, said a report published during the week by Uruguay XXI, the government agency responsible for investment promotion.

The combination of prices and improved crop performance has not occurred in the country since the harvest of 2013 and 2014 and thus leverages expectations soybean exports in 2022.

“In a context of rising international soybean prices, Uruguayan production of the oilseed would increase 50% in 2022, which means that, if the price remains at a similar level to the current one (US$550-600 per ton), soybean exports will reach record figures similar to those of 2014,″ said the document at the beginning of its section that analyzes the possibilities of the crop for this year.

The report, which advances on the different reasons that may lead to this milestone, was also forceful in its conclusion. “In summary, if there is no radical change in the current international conditions, Uruguayan soybean exports will record maximum values in 2022, explained by prices and tons exported,” it said.

The performance of the oilseed will begin to have an impact on Uruguay’s overall export figures in the coming months.

In turn, China, Uruguay’s leading trading partner, is the world’s largest importer of soybeans, with 60% of international purchases.

In 2021, China accounted for 28% of Uruguayan exports of goods, with US$3.3 billion. Of the total placements during the previous year in the Asian country, beef accounted for 45%, cellulose 13%, and soybeans 12%.

KEY FACTORS

The rains recorded in the second half of January this year allowed a good development of crops in Uruguay, which at the same time enabled a good yield potential, except for the north of the country, which is facing a severe drought due to the water deficit recorded since September 2021.

Favorable weather conditions were an exception in the region, as neither Argentina, Brazil, nor Paraguay had conditions conducive to yields on the scale that Uruguay will achieve.

Thus, according to the official report, the expected increase in production is the result of an increase of “15% in the area planted and expectations of average yields higher than 2.4 tons per hectare”. It would be 30% higher than the 2020/2021 harvest.

As for prices, the world reduction in soybean supply and “a smaller reduction in demand” allow maintaining the prospects that the international price will remain at high values, according to Uruguay XXI’s expectations.

With information from Bloomberg

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