Eduardo Turbay of Las Martinetas gives IFT readers the Argentine perspective on the current black bean market situation.

By Eduardo Turbay

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Argentina’s black bean market is displaying its typical seasonal fluctuations. From May through the end of June, there was strong demand from Brazil, driven by the loss of the bean crop there and the delayed harvest in Argentina. Without new crop available, buyers first went for low quality old crop stocks (2015). As Argentina’s harvest was pushed further and further back due to adverse weather (rains and frost), mounting uncertainty as to the new crop’s volume and quality grew and drove prices up as high as US$ 1,100 to US$ 1,150 FCA Puerto Iguazú for top-end No. 1 and 2 grade beans. Low-end No. 2 beans were at US$ 1,050 per MT and No. 3 beans were at US$ 950 per MT. Even 2015 product sold at prices as high as US$ 1,000 per MT. All prices FCA Puerto Iguazú. With export costs of approximately US$ 200 per MT, grower prices were, on average, 200% higher than last year across all grades.   

Starting in July, with the flow of Argentina’s new crop into the market now normalized and Brazil’s elimination of the 10% duty on non-Mercosur imports through October 1st opening the door to shipments of beans from China (2014/15 crop), movement from Argentina slowed and buyers focused exclusively on top-end grade No. 1 and 2 black beans, putting downward pressure on prices. The price gap between low quality and high quality product grew considerably, and in some cases surpassed US$ 150. With Argentina’s producers unwilling to accept lower prices on the lesser quality product and standing firm on grade No. 1 prices, sales dropped off during the month of July. By the end of July, when bean shipments from China had arrived in Brazil and buyers there saw that Argentine beans were of much better quality, sales at higher price levels picked up again.     

We are convinced that worldwide supplies, at least for the period we analyzed (July to December, 2016), fall short of worldwide demand. We therefore conclude that the market will remain firm. We also believe that offers from Brazil for low quality product are in line with the buyers’ true ability to pay; we therefore recommend that Argentine sellers accept these prices and first sell off their inferior quality stocks as quickly as possible so as to later stand firm on higher prices for superior quality beans.

To summarize: through December 2016, we see a very firm market for grade No. 2 and better product at prices of no less than US$ 1,100 FCA Puerto Iguazú and US$ 1,150 FCA Puerto Iguazú for grade No. 1 product. We recommend that sellers not accept lower prices and keep as little stock as possible in storage at the border in order to avoid speculation and pressure from Brazilian buyers.   

Eduardo Turbay Market Analysis and Commercial Strategy Las Martinetas Twitter: @LasMartinetas

English version translated by Dario Bard.
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