**4.1 Soybean**

The world production of soybean in the 2010/2011 season reached 255.5 million tons according to USDA. The main producing countries, U.S.A. (35 %), Brazil (26 %) and Argentina (20 %), participate in 82 % of the world production. They are followed by China, with a participation of 6 % although its presence in the world market has the role of importer because of its high domestic consumption.

For a long period of time soybean main demand came from the EU. Since 1998/99, China has incremented its demand for domestic processing and since the 2004/05 harvest China turned into the main world importer of the grain (60 %) followed by the EU (14.6 %).

As related world suppliers, U.S.A, Brazil and Argentina concentrate 89 % of the total exported (98 million tons) (2009/2010). Argentina occupies the third place as soybean exporter in the world with 14,11 % of the total25 (see Figure 6). Taking into account the six main soybean exporting countries (U.S.A, Brazil, Argentina, Paraguay, China, Canada, Bolivia), three of them – Brazil, Argentina and Paraguay – which make up the MERCOSURrepresent half of the world exportations. This points out the importance of South America in the soybean bean production and exportation.

As seen in Figure 4, the soybean exportation has had a positive trend fostered by the increasing international prices. This indicator -grain exports-26 shows the higher competitiveness of Argentina in the international market.

The main demand of Argentine soybean comes from China. Thus, 78 % of the exported grain had that destination. Argentina also exports to Iran, Thailand and Egypt, and in South America to Chile and Peru.

Fig. 4. Soybean. Argentine exportation (million tons) and price (U\$S/ton) (CIF, Rotterdam) 2000/2009.

Argentina has also imported soybean, especially from Paraguay (98 %) (Figure 5). The need to import soybean can be explained since the processing capacity of the oil industry surpasses the local production of soybean and other oilseeds available for industrialization. The strong increase in soybean importations since 2006 can be explained by the Decree 2147/06, which was the result of a wide negotiation between the industrial-exporting sector and the national government. This decree allows transitory importation of goods that will be subject to a process of industrial improvement. Decree 2147/06 incorporates a tax benefit upon the imported supply which allowed the exporting companies to pay export duties omly on the added value of the imported bean. Since April 2009, the Argentine Production Ministry excluded27 the soybean from the tax benefits of temporary importations. This regulation was based on the grounds that it would promote the increase of the soybean demand in the domestic market and diminish the stock of grain stored by producers in their own farms. (Giancola *et al.,* 2010).

<sup>25</sup> U.S.A participates with 44 % and Brazil with 32 % of the total world exported of soybean.

<sup>26</sup> The decrease in the grain exportation is related to the drop in the production due to a drought (2008 and part of 2009).

<sup>27</sup> That is why no importations have been made since 2009 up to the present.

#### Source: USDA PSD ,2010

#### **4.2 Soybean oil**

376 Soybean Physiology and Biochemistry

exporter in the world with 14,11 % of the total25 (see Figure 6). Taking into account the six main soybean exporting countries (U.S.A, Brazil, Argentina, Paraguay, China, Canada, Bolivia), three of them – Brazil, Argentina and Paraguay – which make up the MERCOSURrepresent half of the world exportations. This points out the importance of South America in

As seen in Figure 4, the soybean exportation has had a positive trend fostered by the increasing international prices. This indicator -grain exports-26 shows the higher

The main demand of Argentine soybean comes from China. Thus, 78 % of the exported grain had that destination. Argentina also exports to Iran, Thailand and Egypt, and in South

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

Soybean Exports Soybean, Rotterdam, CIF, Oil World, (Dolars per ton), Anual

Fig. 4. Soybean. Argentine exportation (million tons) and price (U\$S/ton) (CIF, Rotterdam)

Argentina has also imported soybean, especially from Paraguay (98 %) (Figure 5). The need to import soybean can be explained since the processing capacity of the oil industry surpasses the local production of soybean and other oilseeds available for industrialization. The strong increase in soybean importations since 2006 can be explained by the Decree 2147/06, which was the result of a wide negotiation between the industrial-exporting sector and the national government. This decree allows transitory importation of goods that will be subject to a process of industrial improvement. Decree 2147/06 incorporates a tax benefit upon the imported supply which allowed the exporting companies to pay export duties omly on the added value of the imported bean. Since April 2009, the Argentine Production Ministry excluded27 the soybean from the tax benefits of temporary importations. This regulation was based on the grounds that it would promote the increase of the soybean demand in the domestic market and diminish the stock of grain stored by producers in their

25 U.S.A participates with 44 % and Brazil with 32 % of the total world exported of soybean.

27 That is why no importations have been made since 2009 up to the present.

26 The decrease in the grain exportation is related to the drop in the production due to a drought (2008

0

100

200

300

**Dollar**

400

500

600

the soybean bean production and exportation.

America to Chile and Peru.

millon tons

2000/2009.

and part of 2009).

own farms. (Giancola *et al.,* 2010).

competitiveness of Argentina in the international market.

The soybean oil exportation is concentrated in few countries whereas the importation is diversed. So, the first five importing countries (China, India, UE-27, Iran, Morocco) have 52% of the total imports (2010-2011).

Argentina is the main oil exporting country28. With 49% to 56% of the world total oil exports, followed by Brazil (16%) and the United States (13%). Considering Paraguay, the MERCOSUR is regarded as the main exporting soybean oil block. 96% of the oil exported by Argentina is raw and degummed. The refined oil incidence is very low.

The following table (4) shows Argentine apparent consumption. The data show that most of the oil production is destined to the exports.

In Figure 6 it is shown the Argentina share of total world soybean oil exported. Its main participation was in the 2005-2006 season (57%). Then, this participation decreased until it reached 49% of the 2009/2010 season. According to USDA estimates, in 2010/2011 season the Argentine exports would reach historical values (54.6%).


Table 4. Argentina. Apparent consumption of soybean oil.

 28 It is important to point out that since 2007, Argentine began to export biodiesel obtained from soybean.

Asian countries concentrate most of the Argentine oil demand due to the importance of their growing economy and to the fact that these countries had consumption levels per capita lower than the world average. China (45%)29, India (14%), Bangladesh (6%), Egypt (5%), Peru (5%) are the most relevant destinations of the exported oil by Argentina (2010). Seventy eigh percent of the oil imports and 22% of the soybean imports of China have their origin in Argentina. This shows the strategic importance of soybean and its byproducts in the commercial relationship between China and Argentina.

Fig. 6. Soybean. Argentina share of the world grain, oil and meal exports. (%) 2000/01- 2009/10.

Finally , after a study of the soybean oil exports per company (Table 5) it comes out that the soybean exports market structure is an oligopoly30, with foreign capital predomination (transnational companies) (Eumercopol, 2007).


Source: CIARA (2011)

Table 5. Soybean Argentina. Soybean oil exporting companies. Total export share 2008.

<sup>29</sup> Due to the commercial restrictions imposed by China to the Argentine oil, the exports were drifted to the markets in India, Bangladesh and Iran at a lower price.

<sup>30</sup> The exports participation of the first eight companies (C8) is: 81% for grain, 87% for oil and 97%.for soybean meal.
