The drought situation faced during the austral spring leads to a decrease of 78% of soybean export in Uruguay, compared to the same period a year ago. Argentina’s agriculture sector plummeted 31% in April on a year-on-year basis, according to government data.

For the first time, Paraguay is forecasting to export more soybeans than Argentina in order to fill the supply gap left by the drought (6.3 million tons this year from Paraguay vs 4.2 million tons from Argentina). Argentine soybean harvest just came in at 36 million tons, a drop of 38% over the previous year.

As a result, crushers are operating at less than 70% of capacity and they need to import soybean in order to keep their facilities up and running ; closing down a facility or reducing operations due to a lack of soybeans is more complex in Argentina than importing it (Cargill tried it).

In Brazil, the situation is quite the reverse. Thanks to better climatic conditions, soybean harvest should reach a new record level, and at a lesser proportion for corn. Brazil will likely surpass the U.S. as the largest producer of soybeans this year, taking over the top ranking for the first time in history. According to U.S.D.A. forecasts, the U.S. is expected to harvest 116.48 million tons of soybeans later on in 2018, falling short of Brazil’s estimated collection of 118 million tons for its crop year. Brazil, already the world’s largest soybean exporter, is expected to expand this lead in the coming years thanks to its unique ability to expand planted area in opposition with the Americans which already are using the maximum area possible.

All eyes are now focus on forthcoming harvests of the northern hemisphere were crop conditions decline due to dryer conditions, especially in the Corn Belt.

Heat waves and temperature records were beaten over the last month of June making it the 3rd hottest month registered in the U.S. by the N.O.A.A. in 124 years. Europe neither the Black Sea countries do not escape from the same problems.