Argentine soybean complexFactors of uncertainty

Ramiro CostaBuenos Aires Grain Exchange

IGC, 18th June 2020

TABLE OF CONTENTS

Importance of the Argentine Soybean Complex

Current factors of uncertainty

Impact of the Argentine Agricultural Policies

What to expect for the 2020/21 crop season?

¿Why the Soybean Complexis important for Argentina and international markets?

Argentine Soybean Complex

5% Soybeans

43% Meal

48% Oilof Global Exports

5%of GDP

Source: BA Grain Exchange, Argentine Tresury, INDEC and PSD-USDA.

30%of Exports

SOYBEAN COMPLEX SITUATIONFACTORS OF UNCERTAINTY

TRADE WAR

COVID-19

African Swine Fever

The lock down is having minimal effectson the argentine soybean complex

Th

ou

san

ds

Tru

cks

Number of Week

20202019Avg 2013-18Range 2013-18

Weekly trucks arrive at ports

Source: BA Grain Exchange

DOWNFLOW OF THE PARANÁ RIVER

lowest of the last 55 yearsThis month level is the

80% of the grains

loss of load capacity per ship8,000 - 10,000 tons

are exported through the Paraná River

Beyond this internationalfactors, Argentina has to deal with its domestic sources of uncertainty: Changes in Argentine Ag Policies.

Argentine Agricultural Policies

INCREASE IN EXPORT DUTIES

Soybean Complex 33%

Corn 12%

Wheat 12%

Wheat flour 7%

Sunflower Complex 7%

ELIMINATION OF THE TAX DIFFERENTIAL

Soybean Oilseed 33%

Soybean Meal 33%

Soybean Oil 33%

WHAT´S NEXT?

- A NEW INCREASE IN

EXPORT DUTIES?

- REINTRODUCTION

OF EXPORT

RESTRICTIONS?

Evolution of Soybean Planted AreaM

illi

on

s H

a

0

5

10

15

20

25

4% Avg Growth

-4,7% Avg Growth

+2%

Source: BA Grain Exchange

0

10

20

30

40

50

60

2015/16 2016/17 2017/18 2018/19 2019/20

-10%

Soybean ProductionM

illi

on

s o

f T

on

ne

s

Drought

Avg: 53,7 Million tons

Source: BA Grain Exchange

Crushing and ExportsM

illi

on

s T

on

ne

s

9

41

0

2

4

6

8

10

12

14

16

0

5

10

15

20

25

30

35

40

45

50

Exports CrushingSource: BA Grain Exchange

SIMULATED SCENARIOS FOR 2020/21

Baseline Covid Plus Max DutiesExp. Restrictions

Export Duties established in 2020, Covid-19, AFS and Trade War.

New Covid outbreak in 2021.

Maximum export duties allowed by the economic emergency law.

Maximum export duties plus export restrictions applied between 2008-2015.

For Cereals For Cereals

Baseline Covid Plus Max DutiesExp. Restrictions

-0.6% 17,3 Mha

-0.8%17,2 Mha

+0.7%17,5 Mha

+6.7%18,6 Mha

WHAT TO EXPECT FOR 2020/21?SOYBEAN PLANTED AREA

Source: BA Grain Exchange

For Cereals For Cereals

What if the differential is reintroduced?Crushing 2020/21

in millions tonnes

41

42

45

2019/20 (E) BASELINE WITH DIFFERENTIAL

+7%+2%

Source: BA Grain Exchange

The domestic policy framework willaffect the growth of the soybeancomplex. With a set of policies that promote crushing, we could crush more than 45 million tons in 2020/21.

CLOSING REMARKS

The soybean complex is crucial for the Argentine Economy

and the international markets.

Grain markets are being affected by disruptive international

factors, such as the coronavirus.

The soybean complex in Argentina has to deal also with

domestic uncertainty factors.

Possible changes in Argentinian Ag Policies could have

significant effects on crushing and soybean production.

OUR WORK

Thank youRamiro CostaBuenos Aires Grain Exchange

IGC, 18th June 2020