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Argentina Oilseeds and Products Update 2011

27 November 2011

USDA Foreign Agricultural Service

Argentina's soybean area for MY2011/12 is maintained at 19 million hectares, 300,000 ha lower than the official USDA estimate, according to the USDA Foreign Agricultural Service

Soybeans:

The main production area of Argentina received several good rain showers over the past few weeks providing adequate soil moisture for advancing crop planting. Soybean planting for the marketing year (MY) 2011/12 is estimated to be about 6 percent complete according to the Buenos Aires Grain Exchanges weekly newsletter dated Oct. 27, 2011. Post maintains its previous estimate for area planted to 19 million hectares (ha) with a production of 51 million metric tons (MMT). This is 300,000 hectares and 2 MMT lower than the USDA Official estimate. Corn area is estimated to increase nearly 10 percent due to high prices and the need to rotate soybean fields to replace nutrients. Corn has taken most of the productive soybean area, and the slight expansion of soybeans from last year is mostly seen in the marginal areas and in the northern part of the country. There is still the lingering threat of another la niña year with hot, dry weather, especially during the second half of November through the second half of January. If it is dry during January, the typical time when corn flowers, yields can decrease. Producers could decide at the last minute to plant soy if they feel that planting corn is too risky. In this case, soybean area would go up.

For MY2010/11, FAS Buenos Aires maintains its final production estimate at 49 MMT. As mentioned in last month’s update, soybean exports for MY2010/11 are very strong with 6.7 MMT shipped April 2011 through August 2011 with 3.3 MMT more expected to be shipped by the first week of November based on official port data from the Ministry of Agriculture. This is already higher than the official USDA export estimate of 9.3 MMT. Argentina traditionally exports about 80 percent of its soybeans during the first 6 months of the marketing year. At this pace, FAS Buenos Aires bumps the export estimate to 10.5 MMT (an increase of 1.2 MMT from the official USDA estimate). This estimate is lower than Post’s estimate last month. In September there was nearly a 20 percent drop in soybean prices. This caused some producers to hold on to their soybeans until the price went up again and as a result the official port data estimates were actually lower.

Likewise, soybeans sold for processing are reduced because of the price dip. Crush for MY2010/11 is lowered to 37 MMT (down 400,000 tons from the official USDA estimate). Exports for both oil and meal are also adjusted downward. The holding of soybeans in hope of higher prices has naturally caused stocks to increase.

Sunflowerseed:

Sunflowerseed planting for MY2011/12 has reached 35 percent of the total intended 1,740,000 hectares based on Ministry of Agriculture official data. Post estimates that total area will reach 1,875,000 hectares based on updated information from industry contacts (75,000 ha higher than the USDA official estimate). This year, soybean area increased only slightly and corn took over some of the most productive land. Sunflowerseed expansion is being seen in marginal areas such as Chaco, Entre Rios and Southern Buenos Aires province. This growth more than makes up for the drop in area dedicated to corn and soybeans and where pigeons are a serious problem for the sunflowerseed crop such as Santiago del Estero. With average yields, production is estimated at 3.2 MMT.

Crush for MY2010/11 is raised to 3.4 MMT, up 350,000 tons from official USDA numbers. Nearly all sunflowerseed produced in Argentina is processed in country and with an exceptional harvest of 3.56 MMT, it is expected that the additional sunflowerseed go to crush. As mentioned in last month’s update, official numbers from the Ministry of Agriculture indicate that over 2.1 MMT has already been crushed during the first six months of the marketing year (March through August). Based on the increase in crush, meal and oil are also adjusted with most of the extra supply expected to go towards exports.

Peanuts:

There are no changes to peanut estimates in this report.

Policy:

Cristina Fernandez de Kirchner was re-elected on October 23, 2011, winning with 54 percent of the vote. During her campaign she talked about deepening the current economic model and many are speculating that the agriculture sector in terms of export restrictions, can expect more of the same policies over the next four years. However, it appears that the government is trying to ease some of the conflict with the farm sector. Last week the President attended a lunch with a local farm association who had been one of her major critics over the past 3 years and more importantly, is considering a plan proposed by a local farm cooperative association to change the current system of issuing and regulating export permits for wheat and corn. The government also recently released a strategic agricultural plan with the goal of increasing grain and oilseed production by more than 50 percent to reach 160 MMT by 2020. Another goal in the plan is to more than double agricultural exports by 2020. Although the details are not yet available on how these goals will be reached and what will exactly happen with a change in the export quota systems, if the good weather continues; the grain marketing system becomes more liberated; and the government implements a workable plan to increase grain and soybean production, the future for producers in Argentina will be looking bright.

Further Reading

- You can view the full report by clicking here.

November 2011

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