Soybean becomes Uruguay’s leading export item, displacing beef for the first time

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Lately historically high prices and a strong international financial speculation have moved actively into the soybeans market. Only back in 2008 were prices so strong and the market so bullish.

In Uruguay 30% of the crop has been harvested with yields higher than expected (above 2.000 kilos per hectare) leaving behind fears about the effects of an early drought which was compensated with late rains.

“Behind these very historically high prices there is a strong financial speculation, but for soy farmers it’s an excellent opportunity to capitalize and prepare for the next harvest with a good take off”, said Gonzalo Gutierrez, head of the Agro-business Department from the Agriculture School in Uruguay.

However such optimism is not extensive to wheat or corn farmers in Uruguay, since prices are not as tempting as with soybeans and the market outlook is not so promising.

“There are ample reserves, much wheat remains unsold and market price prospects are not encouraging as for example a year ago, when prices were significantly higher” said Gutierrez who added that the US is expected to harvest a record crop of corn, “if the weather behaves”. The US is the world’s leading producer of corn.

Furthermore profit margins for wheat and corn are not comparable to those of soybeans, and this is particularly adverse for those farmers who rent land, added Gutierrez.

Regarding soy prices Gutierrez said that supply has been eroded by weather conditions in Brazil and Argentina. In Brazil 80% has been harvested but in Argentina, 50%, with yields below expectations.

On the demand side China keeps buying in spite of the high prices, but “there is another element equally important according to Gutierrez: “speculation from investment fund which are buying strongly into beans and flour”.

Last week soybeans in Nueva Palmira, Uruguay’s main grains’ export harbour were trading at between 545 and 550 dollars the ton for this year’s crop with a floor of 460 dollars for the 2013 harvest.

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Post available in: English