Uruguayan Soybeans Rebound After Drought but Margins Stay Under Pressure

Uruguayan soybeans are poised for a sharp production rebound in MY2026/27, but low international prices and high costs mean farm margins remain fragile despite stronger volumes.

Uruguay is emerging from a drought-hit MY2025/26 with production revised down to about 2.0 MMT and yields near 1.5 MT/ha. The upcoming MY2026/27 looks markedly better: planted area is forecast at 1.3 Mha and output seen recovering to 3.1 MMT on normalized yields around 2.4 MT/ha, supported by an expected El Niño pattern bringing wetter conditions. At the same time, global soybean futures have traded sideways to slightly softer this week, reflecting comfortable world supplies and cautious speculative positioning, which keeps a lid on local price recovery and underscores the importance of cost control and risk management for Uruguayan growers.

📈 Prices & Market Tone

Global benchmarks show a soft but stable tone. CBOT soybean futures have drifted lower to sideways over the past three sessions, with declines driven by weakness in soy products and generally favorable crop prospects, while open interest continues to rise, indicating active but cautious participation.

Export-oriented cash prices remain under pressure from this global backdrop. Recent international offers suggest FOB soybeans from key origins trading around EUR 320–430/ton equivalent, with Black Sea values at the lower end and U.S./India at a premium, underscoring strong competition for Uruguay in price-sensitive markets.

Origin	Type	FOB price (EUR/kg)	Approx. FOB (EUR/ton)
US	No. 2	0.60	600
India	Sortex clean	1.00	1,000
Ukraine	Standard	0.34	340
China	Yellow	0.70	700

For Uruguay, which exports nearly all soybeans, these relatively low global prices are squeezing farm margins when combined with domestic cost and land-rent structures.

🌍 Supply & Demand Balance

After a severe drought in MY2025/26 that cut yields to around 1.5 MT/ha and reduced production to about 1.95 MMT, Uruguay is set for a significant supply recovery in MY2026/27. Planted area is forecast at 1.3 Mha, up 50,000 ha year-on-year, with total production expected at 3.1 MMT—back within historical norms but not a record crop.

First-crop soybeans (60–65% of area) remain the backbone of production, with expected yields of 2.5–2.6 MT/ha. Second-crop soy, sown after winter wheat, should yield 1.9–2.2 MT/ha but its area will likely be limited by a decline in winter wheat plantings and the recent drought experience. Geography remains a hard constraint: most expansion is concentrated in the western corridor (Soriano, Río Negro, Colonia and neighboring departments), where soils and logistics are best, while much of the rest of the country is better suited to grazing.

On the demand side, Uruguay continues to export the vast majority of its soybeans. Exports are projected to rebound to 2.8 MMT in MY2026/27 from a drought-reduced 2.1 MMT, largely tracking production swings. China dominates as a buyer, typically taking over 80% of shipments and potentially moving toward 90% under current trade patterns, with residual demand from destinations such as Egypt and Bangladesh.

📊 Fundamentals & Producer Economics

Structural fundamentals remain unchanged: Uruguay is overwhelmingly a whole-bean exporter with modest domestic processing. Crush is projected to rise to 150,000 MT in MY2026/27, producing about 120,000 MT of soymeal and 28,000 MT of soybean oil, still less than 10% of total bean production. Limited crush capacity, higher operating costs, and lack of new investments keep the country reliant on exports for value realization and on imports for part of its soymeal and oil needs.

Producer economics are under strain. Production costs in Uruguay are higher than in neighboring exporters, and more than 70% of soybean land is rented. Persistent high rents, which have not adjusted down with global price weakness, compress margins and limit scope for area expansion. Many operators run mixed crop-livestock systems; if soy prices fall further or costs rise, some land could revert to pasture, especially under regulatory constraints on continuous soy planting and escalating weed-resistance management costs.

Policy signals around biofuels add a medium-term wildcard. The repeal of the 5% biodiesel blend mandate in 2021 sharply reduced domestic soybean oil demand and left the main crusher operating well below its 250,000 MT capacity. While current officials have indicated an intention to reinstate the blend mandate, no concrete steps have been taken. If restored, it could add domestic demand for roughly 200,000 MT of soybean oil, materially shifting the crush and trade balance, but this remains speculative for now.

🌦️ Weather Outlook & Crop Conditions

Looking ahead to MY2026/27, a forecast El Niño pattern is expected to bring a generally wetter season to Uruguay, historically favorable for soybean yields. This underpins the recovery projection to 2.4 MT/ha on a national basis after the recent drought, which left some western fields in near-total loss and delayed harvest in MY2025/26.

Short-term, early-April weather models for Uruguay’s main agricultural belt indicate a shift toward more regular rainfall after the prolonged dry spell, reducing additional downside risk for the tail of the current harvest and improving soil moisture for the next planting window. However, heavy rains at harvest could still trim final volumes in the most drought-affected areas, and localized flooding or waterlogging remains a minor risk.

📉 Trade Flows & Logistics

Uruguay’s export logistics are efficient but concentrated. Around 70% of soybean exports move through Nueva Palmira on the Uruguay River, close to the main western producing areas and benefiting from deep-water capacity. The remaining 30% ship via Montevideo, often as completion loads after partial loading upriver.

There is limited incentive to hold stocks. Farmers typically sell promptly after harvest to generate liquidity and finance inputs for the following campaign, so carry-in stocks are usually minimal and managed mainly by exporters. For MY2026/27, ending stocks are projected to remain low, confirming that any production shock—positive or negative—translates quickly into export availability and cash-price adjustments.

Export competitiveness is shaped not only by price but by quality standards. Uruguay’s current national moisture standard of 14% is higher than what key importers such as China prefer. Ongoing industry efforts to lower the standard to 13.5% or below would improve competitiveness and may open up additional premium market segments in Asia if implemented.

📆 Forecast & Trading Outlook

Market sentiment for soybeans into mid-April is cautiously bearish to neutral. Global futures have softened this week amid comfortable near-term supplies and declining soy product prices, while the market awaits fresh guidance from upcoming balance-sheet updates. For Uruguay, the looming production rebound and high export dependence imply continued sensitivity to global price moves, with limited domestic buffers.

At the same time, strong and stable Chinese demand for whole beans continues to underpin Uruguay’s export program and reduces outright downside risk for basis levels, especially if any weather issues emerge in competing origins. The main risk factor for local producers remains a renewed leg lower in international prices, which would quickly pressure already tight margins given inflexible land rents and rising weed-management costs.

🧭 Strategic Pointers for Market Participants

• Producers: Use the current price stability to lock in margins on a portion of the expected MY2026/27 crop via forward contracts or hedging, especially for rented land with high fixed costs. Prioritize cost control in weed management and fertilization to preserve cash flow under continued low-price scenarios.
• Exporters: Focus on China as the primary outlet but maintain diversification into secondary markets such as Egypt and Bangladesh where possible. Monitor potential changes to Uruguay’s moisture standard and any signals on biodiesel blending, which could alter quality requirements and domestic crush economics.
• Feed and food users: Consider extending coverage for soymeal and oil into late 2026 while prices remain suppressed and futures structure is relatively flat, balancing storage capacity against the possibility of weather- or policy-driven price spikes.

📍 3-Day Price Indication (Directional)

• CBOT soybeans (front month, EUR/ton equivalent): Slight downside to sideways bias over the next three sessions, with moves likely capped unless new macro or geopolitical shocks emerge.
• Uruguayan export parity, western ports (EUR/ton): Expected to track CBOT closely with stable to mildly weaker basis, reflecting recovering crop prospects and firm competition from Black Sea and U.S. origin.
• Regional soymeal delivered to Uruguay (EUR/ton): Sideways, with global meal futures steady around the low-to-mid EUR 300s/ton equivalent and no immediate supply shock visible.