Argentina soy crushing falls sharply as U.S.-China trade war reroutes cargoes

Credit: REUTERS/Enrique Marcarian

By Maximilian Heath

BUENOS AIRES, May 28 (Reuters) - Argentina's soy bean crushing will drop as much as 15% this year due to the prolonged U.S.-China trade war, the head of the local grains export chamber said on Tuesday, illustrating how the standoff has redrawn global trade routes.

Gustavo Idígoras, president of the CIARA chamber, said the conflict had hit the Argentina's crushers as U.S. exports of soybean oil and meal had surged due to a glut of unprocessed beans there that had previously gone to China.

"The low price of soybeans is generating a headache," said Idígoras in an interview on the sidelines of an agricultural event in Buenos Aires. "Idle capacity is growing and milling may be reduced against a good year (of harvest) between 10% and 15%."

He added that confirmed sales of soy derivatives were around 30% below historical volumes so far this year.

Reuters reported in March that Argentina's massive crushing plants along the Parana river were being idled amid a major shift in global trading patterns that have resulted from Washington's trade dispute with Beijing.

According to official data, last year - when a historical drought hit Argentina's farm sector - the domestic crushing industry processed 36.7 million tons of grain, while in 2017 the sector milled 41.8 million tons of grain.

U.S. shipments of soy derivatives have expanded this year, after pushing into parts of markets traditionally dominated by Argentina last year. In the past, much of Argentina's soymeal has been exported to markets such as Vietnam and Indonesia.

"If you look at shipments over the next three months, the United States, in relation to Argentina, will have doubled its number of shipments to the Asian market."

(Reporting by Maximilian Heath; Writing by Adam Jourdan Editing by Chizu Nomiyama and Richard Chang)

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