Paraguay is forecast to export more soybeans than neighboring grains powerhouse Argentina for the first time this year as growers in the smaller country push to increase output and fill the supply gap left by a drought on the Argentine Pampas. Paraguay produces around 3.0 percent of global supply. Any additional exports are likely to be snapped up in a market buffeted by tension over trade policy between top soy importer China, and the world’s second-largest soybean exporter, the United States. Land-locked Paraguay sends most of its soybean exports next door to Argentina, the world’s top supplier of soymeal livestock feed. Paraguayan beans are known for their high protein content, making them especially attractive to soymeal manufacturers. Argentina’s soy crushers have brought in cargoes from as far afield as the United States to compensate for a drought that cut soy output estimates at home to under 40 million tonnes from early forecasts in the 55 million tonne range. Argentina crushes almost all its soy rather than exporting raw beans. Paraguay soybean exports are expected at 6.3 million tonnes this year, according to the U.S. Department of Agriculture (USDA), compared to 4.2 million tonnes from Argentina. Paraguayan soy production rose over the 10 million tonne mark last year and is expected to hit that milestone again this season. The government says the country aims to double production by 2028. The key to hitting that target is the vast, arid western part of the country known as Chaco. Beans from Chaco would be trucked east to the Paraguay River and put on barges headed south to export hubs Nueva Palmira, Uruguay, or Rosario, Argentina. Companies including ADM, Bunge, Dreyfus and AGD have crushing operations along the Paraguay River. Grains giant Cargill has a plant in the eastern soy belt with quick access to the Parana River, which leads to the same export hubs.In addition to Argentina and Uruguay, Paraguay exports soybeans to Europe, Russia and Turkey. To boost exports, a lot more will be needed than a heat-resistant bean, said Hector Cristaldo, a grower and president of Paraguay’s UGP umbrella organization of farm groups. Paraguay needs more “paved roads, silos, ports, and processing services” to accommodate the kind of soy production growth the country wants to see, he said. REUTERS