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Argentina to export 25% fewer soybeans because of floods

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Staff writer ▼ | May 21, 2016
Argentina could export up to 25% fewer soybeans this year than last, analysts said, after severe rains left many fields underwater, damaging oilseed quality.
Soybeans drought
Natural disaster   Floods inundated key farm areas of Argentina
In April, floods inundated key farm areas of Argentina, the world's third-biggest exporter of raw soybeans, prompting the U.S. Department of Agriculture to slash its forecast for soybean output to 56.5 million metric tons this year.

The USDA maintained its export forecast of 11.4 million metric tons, however, despite skepticism from market watchers.

“Argentina will not be able to fulfill its bean export projections,” said Sebastian Gavalda, president of consultancy Globaltecnos, which sees Argentine exports of just 8.5 million metric tons of soy for the 2015/2016 season.

Damaged soybeans from the affected region, which, according to the government, has already lost 6 million metric tons of output, do not meet quality standards for export. Low quality beans would have to be sent to mills to be mixed with quality soybeans. However, mixing could degrade the quality of the soy meal by decreasing protein content.

The oilseeds powerhouse is the world's top exporter of soy meal livestock feed and soy oil, used in cooking and to make bio fuels.

“Standard quality oilseed will be worth a lot, because the industry will need good soy to mix with the damaged oilseed. That will create the fiercest competition between industry and exporters that we have seen in recent years,” said Pablo Adreani, director of consultancy Agripac.

The floods, which set the harvest back by three weeks, hit large areas of Cordoba, Santa Fe and Entre Rios, the country's three top farming provinces after Buenos Aires province, whose crops were not affected by flooding.