BUENOS AIRES, ARGENTINA – An increase in acreage will offset lower than average yields and lead to a larger corn crop in Argentina in 2018-19, according to an Oct. 24 Global Agricultural Information Network report from the U.S. Department of Agriculture.
USDA projects Argentina’s corn production at 41.5 million tonnes, about 500,000 tonnes higher than its previous estimate and significantly higher than the drought-ravaged 2017-18 corn crop of 32 million tonnes.
USDA said despite recent export tax policy changes that negatively affect corn returns, it believes planting area will only diminish marginally from earlier projections.
In early September, the government implemented a new export tax scheme in which corn exports will be applied a tax of 4 Argentine pesos per $1. Based on the current exchange rate, the tax is roughly 10.5%. The tax on soybeans is only expected to rise by 3%, USDA said.
USDA said it expects corn planting area to diminish only marginally from earlier projections.
“By the time the new taxes were implemented, many producers had most inputs purchased to plant corn and numerous farmers had prepared the soil with chemical fallows which, in most cases, do not allow them to switch to soybeans,” USDA said. “Corn production remains profitable despite the recent policy changes.”
USDA estimates 2018-19 Argentine corn exports at 26 million tonnes, 1 million tonnes lower than its previous estimate.
“From November 2018 to February 2019, local brokers believe shipments will slow down significantly due to strong competition from U.S. corn,” USDA said. “As such, farmers will likely sell first their wheat and barley supplies which have good prices and hold onto their corn, expecting better prices or a more convenient exchange rate in the future.”