Strong Demand for Corn Challenges Soybean in Uruguay
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Uruguayan farmers are experiencing very challenging growing conditions. Far below-average yields are anticipated for first and second-crop Soybeans in Marketing Year (MY) 2022/2023. These low yields and reduced harvested area (due to abandonment) mean that many producers will struggle to recover their costs, especially on rented land. Lower production will reduce Uruguay’s Soybean exports to 850,000 metric tons (MT), the lowest level in 16 years. According to AgFlow data, Uruguay exported 0.3 million tons of Soybeans to China in Jan-May 2023, followed by Argentina (0.16 million tons), Panama (30,000 tons), and Venezuela (20,000 tons).
Soybeans are the dominant summer crop in Uruguay, but strong demand for corn from the livestock sector will lead to increased corn planting at the expense of Soybeans. Expansion in Soybean planted area is likely from farmers with mixed crop and livestock operations converting a higher-than-average portion of the pastures to agriculture. A projected return to average climatic conditions and trend yield leads Post to project MY 2023/2024 Uruguayan Soybean production at 2.9 million metric tons (MMT), producing 2.6 MMT of exports.
Due to topography and soil type, much of Uruguay’s arable land is better suited to beef and dairy cattle production than crop cultivation. Uruguayan grain and Oilseed production (except rice) is centered in the western third of the country with the highest-rated soils. This region, centered in the Departments of Soriano, Rio Negro, and Colonia, consistently has more land under crop cultivation than other parts of the country.
High commodity prices drove this trend, the introduction of glyphosate-resistant Soybeans, and the inflow of foreign capital and farming know-how, primarily from Argentina. Commodity price declines in the mid-2010s led many producers to return cultivated farmland to pasture. Foreign-financed farming companies focused primarily on farming (mainly of Argentine origin) reduced the scale and intensity of their operations, leaving more land available for Uruguayan producers who were more likely to be mixed farming and ranching operations. These changes resulted in a steady decline in the Soybean planted area from MY 2015/2016. This five-year trend reversed in MY 2019/2020 as rising commodity prices brought more land back into crop production.
Current high prices will lead to an increase in land under cultivation and production but with an overall decrease in yield and more annual variability, thanks to the lower quality of land coming into production. The most dramatic change to Uruguayan cropping practices in recent years has been the rapid adoption of rapeseed as a competitor to wheat and barley in the winter crop rotation. In MY 2022/2023, rapeseed became Uruguay’s most significant winter wheat crop by planted area. Though rapeseed planted area for MY 2023/2024 is projected to decline relative to the record expansion of the prior year, private sector contacts believe that rapeseed will continue to account for around one-third of winter crop planted acreage going forward.
Soybean Outlook in Uruguay
Post projects planted acreage at 1,275,000 hectares (HA), an increase of 50,000 HA or 4% over revised estimates for 2022/2023 planted area on high international Soybean prices and falling inputs prices. With a return to trend for yield, total production is projected at 2.9 million metric tons (MMT), an increase of 2 MMT, or 231%, from the disastrous MY 2022/2023 drought. Even higher prices are unlikely to bring more hectares into production immediately because producers have learned which areas can be profitably farmed during the last period of high prices. During that period, some areas which were speculatively planted were later found to be unproductive. Post anticipates an intensification of crop cultivation in western Uruguay and some expansion in the central and northeastern parts of the country.
Other sources: USDA
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