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Argentina Expects Record Year for Soybeans

19 October 2012
USDA Foreign Agricultural Service

ARGENTINA - Foreign Agricultural Services (FAS) Buenos Aires makes no changes to the official USDA area and production estimates for soybeans and sunflowerseed for the marketing year 2012/13. Soybean area and production is expected to reach 19.7 million hectares and 55 million metric tons, respectively. Sunflower area and production is estimated at two million hectares and four million metric tons, respectively.

Marketing year (MY)2012/13 is expected to be a record year for soybean production. After two hard years with dry weather and big losses, production is expected to reach 55 million metric tons (MMT). Early weather predictions of an “el niño” year with cooler weather and more rain are already proving to be true. August showers for 2012 soared above historical rainfall during the same month.

Excessive rains have caused flooding in many areas of central, southern and western Buenos Aires province. It is estimated that more than 10,000 hectares are under water but more than two-thirds of this is in the cattle producing region, not on crop land. It’s still too early to tell whether or not the crop land that is affected by the flooding will cause delays in planting. So far, it has been a welcomed change and has left the majority of the country with adequate soil moisture for crops.

Biodiesel Policy

On August 10, 2012, the Government of Argentina announced an increase in biodiesel export taxes from 20 per cent to 32 per cent. This, combined with the export block of Argentine biodiesel to Spain after the YPF nationalisation, led many analysts to lower their estimates of the amount of soybean oil used by the biodiesel industry, some by even one MMT.

This announcement was not well received by the industry, especially since many producers had invested millions of dollars in biodiesel plants over the past several years. Apparently, their concerns were heard and on September 19, 2012, the government announced a new policy that lowers the biodiesel tax to a variable rate of 17 per cent and 24 per cent, based on soybean prices. The sliding tax will be reviewed every 15 days and includes a producer guarantee of a four per cent fixed margin.

This softens the blow from the August announcement but still leaves producers with uncertainty regarding what tax rate they will end up paying. In the August 10 resolution a temporary regime to allow imports of soybeans for crushing in-country was also announced.

In order to be able to import, crushers must register with the “Authorised Soybean Operators Registry” and prove they have purchased five MMT of domestic soybeans for every 1 MMT of imported soybeans. It is reasonable to estimate that a potential one to three MMT tons could be imported for crushing however, according to local sources, there are still no clear rules on how to register or how to measure the domestic purchase so it is unclear whether or not soybeans will actually be imported this season.

Further Reading

You can view the full report by clicking here.

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