Argentina’s Soybean Output to Skyrocket
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For MY 2023/2024, Post projects Argentina’s Soybean planted acreage at 16.9 million HA. Total production is projected at 50.5 MMT, up 111 percent from the historic drought in MY 2022/23. While this forecast assumes a return to normal/neutral weather, some analysts predict a turn to an El Niño weather pattern after three consecutive years of a La Niña pattern. While La Niña patterns typically lead to drier weather in key growing regions of Argentina, an El Niño pattern naturally increases rainfall which could lead to higher-than-average Soybean yields.
The increase in the planted area will primarily come from areas not planted for any summer crop in MY 2022/23, as drought conditions discouraged planting in many areas, especially second-crop Soybeans. Seed availability will concern Argentine producers due to the prior year’s drought, which resulted in a much higher percentage of green and shrunken beans than usual. Thanks to Argentina’s lax intellectual property rights rules and seed law, many farmers save Soybean seed yearly for replanting. While this has reduced costs for farmers, it has led to a plateauing of yields (compared to Corn) as seed companies have hesitated to introduce their latest technology and varieties into the Argentine market.
But concerns over the quality of saved seed may encourage more farmers than usual to enter the formal seed market in MY 2023/2024 to ensure good quality seed. Some farmers still have seed saved from the MY 2021/2022 season, but germination rates are lower for older seeds, so farmers choosing to plant this older seed may need to increase seeding rates to account for the lower expected germination rate.
Farmers have generally made money over the last three years and are in a solid working capital position. However, most have limited cash savings due to their attempts to manage assets in an inflationary environment and the poor MY 2022/2023 winter and summer harvests. The financial position of farmers varies by region, with the worst-hit region being northern Buenos Aires Province, where high rents and three disappointing crops have put producers in a more precarious position. As per AgFlow data, Argentina imported 0.53 million tons of Soybean from Brazil in Jan-Apr 2023, followed by Uruguay (95,167 tons).
Agronomists surveyed in the central pampas indicate that 300 mm of rainfall is needed between March and June to ensure adequate reserves for planting winter wheat and barley. However, some producers may be willing to grow with less than half of that amount in anticipation of a wet spring with an El Niño weather pattern. Farmers under financial stress may want to plant wheat to receive income in December at harvest time and then plant second crop Soybeans to receive a second harvest.
Corn Competes With Soybean in Argentina
While this double-cropping strategy has had the highest theoretical margins in recent years, it had underperformed in recent cycles, especially in 2022/2023, when second-crop Soybeans were some of the crops most drastically damaged by the drought. Thanks to lower fertilizer prices, Corn has the highest theoretical margin for 2023/2024, and Corn (thanks to new hybrids and biotechnology) has shown more resistance to adverse weather conditions in recent years than Soybeans.
Accordingly, rain totals in the coming months should dictate how much winter grains are planted. If there is a high planted area for winter crops like in recent years, then Argentina would continue to plant a relatively high proportion of second-crop Soybeans (which typically yield less) than first-crop Soybeans. Farmers are faced with planting Corn or first-crop Soybeans on fallowed fields if rains do not arrive, and farmers are unwilling to risk the outlays needed to plant winter grains.
Other sources: USDA
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