Argentina's developing weather could lead to soybean loss

by World Grain Staff
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WASHINGTON, D.C., U.S. — Excessive rain and heat levels in various areas of Argentina could lead to damage, resulting in yield and area losses of soybean, the U.S. Department of Agriculture’s (USDA) Foreign Agricultural Services (FAS) said in a March 1 report.

Soybean crush is revised up to 44.6 million tonnes as current conditions make it more economically viable to add value to soybeans than market the grain alone.

Producers and analysts report that if additional rains develop in the next two months (as per historical patterns), there could be noteworthy area losses due to severely damaged crops and/or flooding. Local travel conducted through Buenos Aires province found that areas in north La Pampa, south Santa Fe, North West Buenos Aires, and east Cordoba provinces could soon receive enough rain to result in significant area losses due to flooding. Contacts from this region indicated that over 1.5 million hectares could be at risk.

In Cordoba province, the Grains Exchange of Cordoba forecasts a 7% decline in production compared to last season due to lower yields and area losses. Although this season’s yields are not near the record levels of last season, yield estimates are above average at 3.2 tonnes per hectare. This analysis is also reporting an increase of 66% in area losses for the province – totaling nearly 391,000 hectares. These losses can be partly attributed to dryer conditions in the northern part of the province and excessive water levels in the southern part. Argentina’s current 2015-16 area harvested remains unchanged at 20 million hectares ,the report said. As a result, 2015-16 production is estimated at 58.5 million tonnes. Despite these forecasts, weather conditions still have the potential to differ greatly from expectations as witnessed earlier in the season.

Private estimates along with local news sources indicate that Argentina’s soybean crush has escalated significantly during the months of January and February. They report that many crushing facilities are operating at full capacity in the province of Santa Fe, where the country’s most important port, Rosario, is located. Fueling this crush is the economic situation facing the industry after the new government’s lowering by fivepercentage points soybean and byproducts export taxes. Analysis from the Grains Exchange of Rosario states that the internal market does not have much flexibility to wait for soybean grain prices to escalate, forcing a shift towards greater soybean processing. Moreover, many expect that under the new political and economic environment, this shift towards value-added processing of soybean will amplify. Based on these developments and local estimates, 2014-15 crush is revised up to 44.6 million tonnes. This represents a significant increase over official USDA estimates but is widely supported by analysts and private sector contacts, the report said.

Argentina’s 2014-15 soybean exports are left unchanged compared to the previous estimate at 11.85 million tonnes. Current trade data, expected sales based on the return on equity registry and the above mentioned trend towards greater crush support this estimate.

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