January 16, 2012

Argentine farmers to get better profit from corn than soy

Corn acreage surged in Argentina this fall, as farmers are expected to make better profit from corn instead of soy for the first time ever, said Kurt Shultz, US Grains Council director in Latin America.

"The estimate is that farmers' net profit will be US$150 per tonne (US$3.81 per bushel) more with corn," Shultz said.

"With this kind of incentive, some analysts predict corn acreage could increase from four million hectares (10 million acres) to seven million hectares (17.5 million acres) within the next three to five years."


The situation, he noted, is fluid and depends in part on Argentine government decisions.

Based on these figures, the natural assumption is that the government will expand export quotas from 15-19 million tonnes (591-749 million bushels) to get rid of surplus production.

However, Shultz further commented that "government policy in Argentina is very unpredictable, so issues such as import restrictions on fertiliser or currency devaluation add a tremendous amount of uncertainty to the outlook."



Weather has also been an uncertainty in the Argentine outlook. As of December 17, dry weather dominated central and northern Argentina, reducing the moisture available for crop development. For most major producers of summer crops (including corn), rainfall was well below 10 millimetres (4/10 of an inch).

The lower Parana River Valley recorded a third week of unfavourable dryness as early planted corn was advancing through reproduction.



Next week, the 2012 Officer Mission through Argentina and Brazil will include USGC President and CEO Thomas C. Dorr, USGC Chairman Wendell Shauman, together with Council's Treasurer Julius Schaaf, Secretary Ron Gray, and Past Chairman Terry Vinduska.



Mission members will see firsthand production outlook and current infrastructure conditions. The Council will be accompanied by NCGA's President Garry Niemeyer, First Vice-President Pamela Johnson, and CEO Rick Tolman.