The global soybean market is on the move.

While the harvest in Argentina collapses dramatically due to the worst drought in 60 years, neighboring Brazil is heading for a record harvest.

The two contrasting developments in two of the most important soybean producing countries are also likely to have an impact on the world market and the global supply situation.

In Argentina, the soybean harvest in the current season will be 25 percent smaller than expected, instead of 49 million tons it will probably be 37 million tons, as the grain exchange in Rosario forecast.

That's a 13 percent lower harvest than last year and the third worst in the past 15 years.

Argentina is currently suffering from the La Niña weather phenomenon, which leads to significantly less precipitation.

According to estimates, the wheat harvest is likely to fall from 22.1 million tons last year to 14.9 million tons, for corn the grain exchanges revised their expectations down from 50 million tons to 37.8 million tons.

Export losses weigh on the economy

For the agricultural country Argentina, the crop failures mean heavy losses.

The grain exchange in Rosario estimates the loss of earnings at around eight billion US dollars, which corresponds to around 18 percent of foreign exchange earnings from agricultural exports.

The agricultural sector is one of the most important foreign exchange earners for the economically battered country.

But the poor harvests in Argentina are also likely to have an impact on global markets and the global supply situation.

Argentina is the third largest producer of soy after the USA and Brazil.

The South American country is also the world's largest exporter of soybean meal and soybean oil.

Soy is mainly used as a feed additive in livestock farming.

German farmers also feed large amounts of soy to pigs, cattle and poultry during fattening.

For the supply of the important protein supplier, Germany is dependent on imports.

Most recently, Germany imported 3.9 million tons of soy, mainly from the USA and Brazil.

Increase in production in the neighboring country

With acreage expanding and favorable weather conditions in most of the producing regions, Brazil is currently heading for a record soybean harvest.

According to the analysis company Safras & Mercado, Argentina's neighboring country is likely to produce around 150 million tons of soy on an area of ​​more than 40 million hectares this season.

If the forecast of the leading consulting company in the Brazilian agricultural economy is confirmed, it would mean an increase in production of more than 20 percent.

According to analysts, demand for soy is likely to remain strong.

China alone will import 98 million tons of soy this year - 8.3 percent more than in 2022, according to a study by the analysis company S&P Global.

Demand is also fueled by the war in Ukraine.

Because the previous top exporter can only export a little sunflower oil due to the hostilities, the importers are looking for alternatives and are buying more soybean oil, for example.

Given the record harvest in Brazil, however, supply could soon exceed demand.

"I don't know if the world really needs 100 million tons of soy from Brazil," said agricultural analyst Kory Melby.

Daniele Siqueira of market research firm AgRural says: "We expect soybean prices to fall in 2023 under pressure from greater South American production and macroeconomic concerns."

According to a study by the University of Maryland, the area under soybean cultivation in South America has doubled in the past two decades.

Environmental protection groups criticize the fact that forests are being cut down and habitats for animals and plants are being lost.

According to calculations by the nature conservation organization WWF, every person in the EU and Great Britain consumes more than 60 kilos of soy a year - most of it as animal feed in livestock farming.