COMMODITIES 2025: Brazil to boost meal output amid competition from Argentina

This is part of the COMMODITIES 2025 series where our reporters bring to you key themes that will drive commodities markets in 2025.

Brazilian soybean meal production is projected to rise in the marketing year ending Dec. 31, 2025, driven by increased crushed volumes, while a consistent output from Argentina may further exert pressure on the region's FOB prices.

Data from S&P Global Commodity Insights indicates that Brazilian soybean meal production will reach 44.30 million mt in the marketing year, representing a 4.2% increase from MY 2023-24. This aligns with historical predictions of soybean harvest and crush at 169 million mt and 57.50 million mt, respectively.

Brazilian soybean processing is set to increase to meet the anticipated rise in domestic soybean oil demand for biodiesel, with the blending mandate increasing to 15% from March, up from the current 14%.

The edible oil constitutes approximately 70% of the raw materials used in the country's biodiesel industry.

Brazilian soybean meal demand

A new round of trade dispute between the US and China could lead the latter to significantly increase its soybean meal imports from Brazil, market sources said.

In the year-to-date until Dec. 3, China imported a net volume of 1.10 million mt of soybean meal, out of which 63.6% was supplied by Brazil alone, according to data from Commodities at Sea(opens in a new tab).

However, promising soybean production in Argentina could limit the global demand for Brazilian soybean meal and oil, limiting the domestic demand for crush and leaving more soybeans on the export front, Daniele Siqueira, market analyst at AgRural, told Commodity Insights.

Rising blending mandates, accompanied by increasing demand from the livestock sector, are expected to push Brazil's crushing capacity in the coming year, boosting soybean meal output, sources said.

"Over the next decade, this production could jump to 48.6 million mt under the average projection, or up to 55.6 million mt in the best-case scenario," Geraldo Isoldi, agricultural markets analyst at King Korn, said.

In this context, Brazilian FOB prices are expected to continue pressured in 2025, owing to abundant supplies.

Argentinian weather in focus

Similarly, market participants are optimistic about Argentina's soybean crop due to favorable weather conditions observed thus far.

Argentina has resumed its position as the world's largest soybean meal exporter in the local marketing year 2023-24 (April-March), after losing this title to Brazil in 2022 due to a severe drought. This leadership is expected to continue in MY 2024-25.

Commodity Insights forecasts Argentina will produce nearly 34 million mt of soybean meal in MY 2024-25, reflecting a year-over-year change of 2.3%. Shipments are estimated at 29 million mt, compared with 23 million mt from Brazil.

Concerns persist regarding potential weather impacts from the La Niña phenomenon, characterized by cooler surface waters in the Pacific Ocean, which typically leads to below-average rainfall in southern South America.

In recent years, this phenomenon has been linked to declining water levels in the Paraná River, which directly affects Argentina's export competitiveness, as the river is the main route to the Rosario hub.

Pressured prices

With substantial soybean meal outputs anticipated for both Argentina and Brazil, local prices are already showing downward pressure, exacerbated by declining Chicago Board of Trade futures.

On Dec. 13, Platts, part of Commodity Insights, assessed both the Argentinian FOB Up River and the Brazilian FOB Paranaguá outright prices for January dates at $325.40/mt, down 30.4% and 28.9% year-over-year, respectively.

Spot FOB prices in Argentina and Brazil have been hovering at four-year lows. In Brazil, this trend is likely to benefit domestic poultry and pork producers, who rely on soybean meal as a key component of animal feed.

EUDR and Trump

Several uncertainties remain on traders' radar, starting with the EU Deforestation Regulation. Sources indicated that 2025 may see extensive discussions on this topic.

The EUDR has been postponed by 12 months, taking effect on Dec. 30, 2025, for large operators and traders, and on June 30, 2026, for micro and small enterprises.

Once implemented, EU-based importers will be required to provide verifiable information demonstrating that commodities such as soybeans were not cultivated on land deforested after 2020 and were grown in compliance with local laws.

Additionally, attention will be focused on Donald Trump's return to the White House.

"If a US-China trade war occurs, it will be by far the biggest influence on the market," said Jack Larimer, senior research analyst at Commodity Insights. "If it does not occur, I suspect crush margins will remain favorable in Brazil and Argentina, despite increased soybean meal supplies, especially with the EUDR postponed."

According to Javier Preciado Patiño, agronomist and former undersecretary of agricultural markets at Argentina's Ministry of Agriculture, "If the Trump administration promotes the substitution of imported used cooking oil, tallow, or other feedstocks for domestic vegetable oils like soybean oil, we will see more exports of soybean meal that compete with Argentina's in global markets."