Uruguay Eyes Bangladesh as a New Open Soybean Market
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The Soybean crushing industry is limited in Uruguay because the country developed as a major Soybean producer later than its larger neighbors, Argentina and Brazil. The largest Soybean crushing facility is owned by COUSA and is located near Montevideo. The plant was built partially in response to Uruguay’s 2007 biofuels law which dictated that 5% of all diesel fuel in Uruguay be biodiesel derived from Uruguayan-grown feedstock. The company contracted with ALUR, the state-owned bio-based fuel and chemical company, to provide oil for biodiesel production. The facility has an annual crush capacity of 250,000 tons but also processes sunflower and rapeseed.
In recent years, it has proactively sought to source these commodities, and their crush volumes relative to Soybeans have grown. There are some small-scale soy crushing facilities around the country that produce meals and oil for local consumption and small quantities of products for export. These facilities use pressure sieves and do not use solvent extraction.
Soybean meal is consumed by the local dairy, poultry, and pork industries. No major expansion is planned in the coming year in these sectors. Soybean oil is used in cooking and biodiesel production. In 2021, Uruguay eliminated its 5% biodiesel mandate in 2021 to reduce diesel prices and Government spending. However, the state-owned biofuel producer ALUR is permitted to mix at up to a rate of 2.5% if it cannot find foreign markets for its biodiesel. Before the change, Uruguay consumed roughly 50,000 liters of domestically produced biodiesel.
In February 2023, the Uruguayan Ministry of Livestock, Agriculture, and Fisheries announced the detection of Highly Pathogenic Avian Influenza (HPAI) in wild birds. In March, several backyard poultry flocks were affected. While HPAI has not spread to large-scale poultry facilities so far, if this were to occur and widespread depopulations become necessary, it would significantly reduce the domestic demand for Soybean meal.
Soybean Exports in Uruguay
According to AgFlow data, Uruguay exported 78,047 tons of Soybeans to Argentina in June 2023, followed by China (52,712 tons) and Costa Rica (30,000 tons). For MY 2023/2024, Post projects Uruguayan Soybean exports at 2.6 MMT, up more than 300 percent over MY 2022/2023 projected exports. The dramatic increase is due to a forecast increase in production as yields return to trend following the drought in MY 2022/23. The vast majority of Uruguayan Soybeans are exported as whole beans. The principal market for these beans has been and continues to be China.
However, shifts in global trade patterns since 2018 have led to increasing diversification. Uruguayan industry sources report that Uruguayan Soybeans face tighter phytosanitary restrictions in shipments to China than many of their competitors. A longstanding phytosanitary agreement that both countries have repeatedly renewed requires Uruguayan exporters to prevent certain weed seeds from being found in shipments or risk rejection of the cargoes. In February 2021, the Ministry of Livestock, Agriculture, and Fisheries published a short best practice guide to help farmers avoid allowing seeds from banned weeds from entering into commerce.
Due to the full implementation of this agreement, Uruguayan exporters have begun to segment stored Soybeans into lots that can meet Chinese requirements and those that cannot. While China is still the preferred export destination, unless the weed seed requirements are relaxed, Uruguay will likely continue sending a more significant than usual proportion of its production to alternative markets that will accept shipments that include these seeds.
The Uruguayan Agricultural Ministry continues to seek to open new markets for its Soybeans, including Bangladesh. The export terminals in Nueva Palmira are the chief loading point for Uruguayan Soybeans, though improvements in port logistics may somewhat increase Montevideo’s share of loadings in the coming years.
Other sources: USDA
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