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April 16, 2018

Paraguay may Export up to 2 Million Tons of Soybeans to Argentina

Author: Michael Cordonnier/Soybean & Corn Advisor, Inc.

Paraguay is the third largest soybean producer in South America after Brazil and Argentina and the 2017/18 soybean crop in the Paraguay is ending on a positive note. The growing season started off dryer than normal, but the weather improved as the season progressed.

Paraguay exports approximately 60% of their soybeans and they processes approximately 40% into soybean meal and soybean oil. Traditionally the major importers of Paraguayan soybeans are the European Union and Russia, but that may change this year. Due to the severe drought in Argentina that has impacted their soybean production, it is estimated that Argentina may import as much as 2 million tons of soybeans from Paraguay in order to keep their processing facilities operating.

Most of the soybeans exported from Paraguay are barged down the Parana River and exported through ports in Argentina. The majority of Argentina's processing facilities are also located along the Parana River, so it would be relatively easy to transfer the soybeans to processing facilities instead of export facilities. Argentina has already imported soybeans from the United States and Brazil as well over the past few weeks in order to keep the processing facilities up and running.

Paraguay is unique in South America because they plant a significant second crop of soybeans following the harvest of the first crop of soybeans. Farmers in Paraguay are allowed to plant their soybeans as early in the spring as the weather permits. Many farmers start planting in August, which means they start harvesting in December and January. This allows them to plant a safrinha soybean crop or a safrinha corn crop.

During the 2017/18 growing season, many farmers opted for more safrinha soybeans and less safrinha corn due to stronger soybean prices relative to corn. It is hard to know exactly how many hectares of safrinha soybeans were planted in Paraguay this growing season, but it may be as high as 500,000 hectares. The weather has been very good for the safrinha soybeans and farmers will start to harvest their safrinha soybeans within a few weeks.

The 2017/18 Paraguay soybean estimate may end up a little larger than had been previously estimated. According to the Paraguayan Grain and Oilseed Merchandizers and Exporters Association (CAPECO), the 2017/18 Paraguayan soybean crop may end up at close to 10.0 million tons. This would be just short of last year's crop of 10.3 million tons. They estimate that farmers planted 3.4 million hectares of soybeans for their main crop and that the main crop will total 9.2 to 9.4 million tons with the remainder coming from the safrinha crop.