May 12, 2008

 

Argentina's oilseed production to increase slightly in 2008-09

 

 

The USDA expects Argentine oilseeds production to increase slightly in the 2008/09 crop year, according to a report released last week.

 

Soy planted area is expected to remain at 2007/08 levels (17 million hectares) while areas planted in sunflower and peanuts are expected to increase by 5 and 10 percent, respectively, over 2007/08 levels.

 

The impact of higher international prices is expected to be largely offset by increased export taxes.

 

The report also highlighted recent strikes in Argentina that threatened exports.

 

The beneficial impact of higher world prices on production in 2008/09 is expected to be largely offset by increased export taxes on oilseeds.

 

Farmers responded to the new export tax by staging a 21-day farm strike that seriously disrupted the harvest, processing and export of oilseeds.

 

The USDA also expects farmers to increase production of rapeseed and linseed, as well as other minor crops, as producers look to alternative crops that do not face high export taxes.

 

 

Soy
 

Increased export taxes would likely limit the expansion of soy area that has been seen in recent years. Although soy currently face the highest export tax among the major crops, soy production still generates among the highest returns to producers given current world prices.

 

As such, the USDA does not expect a decline in soy area.

 

Production for 2008/09 is also forecast to remain at similar levels to the 2007/08 crop due to expected average yields. The USDA also does not expect large variations in yields to the 2008/09 crop as a result of the El Nino-Southern Oscillation phenomenon.

 

The USDA estimates the 2007/08 crop at 47.5 million tonnes.

 

 

Soymeal 
 

Domestic soy crush is expected to reach 39 million tonnes, while imports are forecast to reach 2.6 million tonnes.

 

Soymeal consumption is very low with only slight increases expected for 2008/09 due to some increased use for feed consumption and poultry production.

 

The strikes have lowered crushing capacity, according to the USDA.

 

Most crushing plants with port facilities have filled their storage capacity to maximum levels in concert with the advancing harvest, which will likely provide most plants with around 30 operational days until stocks are depleted, if their supply is cut off, according to the USDA

 

It may also be possible for those crushers to import raw product from Paraguay to fill part of the gap from any shortages of Argentine soy.

 

 

Soy exports
 

The USDA forecasts that soy exports will reach 10.5 million tonnes, slightly down from the estimated 10.9 million tonnes for 2007/08.

 

Although 2006/07 exports are estimated at 12.4 million tonnes, an increased demand for crush combined with decreased production in 2007/08 limits supply available for export. Soy oil exports are forecast at 5.7 million tonnes for 2008/09, down from the estimated 5.9 million tonnes for 2007/08 and 6.5 million for 2006/07. Rising demand from Argentina's rapidly growing biodiesel industry would slow soyoil exports.

 

 

Sunflower seeds

 

Based on expected average yields in 2008/09, the USDA forecasts production at 4.6 million tonnes.

 

Like soy, sunflowerseeds face a high export tax, but are relatively profitable due to low input costs and high prices.

 

Area is expected to increase in the northeast of Argentina, where yields were very good during the 2007/08 campaign. There are also strong planting intentions expected for the west of Buenos Aires Province, La Pampa, and San Luis.

 

The USDA estimates the 2007/08 crop production at 4.5 million tonnes on area planted of 2.7 million hectares. The 2007/08 crop has now been completely harvest and yields were considered good to very good.

 

 

Peanuts
 

Peanut area in 2008/09 is forecast to increase by 10 percent, reaching 230,000 hectares due to high international prices for confectionary peanuts. With expected average yields, the USDA forecasts 2008/09 production at 650,000 tonnes.

 

Argentina's favorable agro-climatic growing conditions, primarily in southern Cordoba province, allows for high quality peanuts.

 

The 2007/08 crop is estimated at 595,000 tonnes on a planted area of 210,000 hectares. Argentina's overall harvest has reached about 25 percent of the total area planted in peanuts.