September 11, 2013


Argentina's 2013-14 soy crop may reach 53 million-54 million tonnes


Driven by a larger planting area and favourable climate, Argentina's upcoming 2013-14 soy harvest is seen reaching a record 53 million to 54 million tonnes.


The upbeat forecast stems partly from the fact soaring corn cultivation costs and low final prices have pushed farmers toward planting more soy in the world's biggest soyoil and soymeal exporter.


Analysts forecast soy sowing area will expand by 500,000 hectares compared with the previous season. Of those, 120,000 hectares are expected to come from land previously destined to corn production. The remaining likely come from land previously destined to other more minor crops, such as cotton, as farmers seek crop rotation to guarantee soil fertility.

Estimates for the harvest that wrapped-up in July hover between 19 million and 20 million hectares.


"Corn, due to costs and expected prices, keeps clocking a decline in planting area," said Gustavo Lopez, the head of the Agritrend consultancy.


Declining Chicago corn futures, the crop's greater need for pricey fertilisers and agrochemicals as well as government export curbs that distort both corn and wheat prices have further hampered corn production, just as Argentina emerges as a supplier to commodities-hungry China.


Inflation and financing costs have risen under President Cristina Fernandez, who was re-elected in 2011 on promises of increasing government's role in Latin America's no. three economy.


Lopez forecasts the 2013-14 soy area will reach 19.5 million hectares and produce 53 million tonnes. That would mark an increase from the 49.4 million tonnes of soy produced in 2012-13, according to the Agriculture Ministry.


Argentina's current soy production record stands at 52.7 million tonnes, produced in the 2009-10 season, which has never been topped, as adverse climate has countered an increase in sowing area. Soy is Argentina's top crop, followed by corn. Export taxes on both crop provides the state with key income.


According to the USDA, Argentina is expected to harvest 53.5 million tonnes of soy in 2013-14. Corn is seen at a record 27 million tonnes, broadly unchanged from the past season as benign climate is expected to compensate for the fall in sowing area.


The Buenos Aires Grains Exchange puts 2013-14 corn area at 3.56 million hectares, down the previous season's 3.68 million.


Wheat is seen losing around 100,000 hectares, according to the Agriculture Ministry.


Meteorologists and experts expect climate to improve for this season's soy, which is set to start in coming weeks, compared with the 2012-13 batch. That crop was initially also seen at record highs, but droughts, floods and frosts curbed production. 


"As of the start of spring, there will be rain in most of the agricultural area, gradually replenishing the soil's humidity reserves, but presenting the risk of severe storms and bulging big rivers," said Eduardo Sierra, weather expert with the Buenos Aires Grains Exchange.


However, Sierra warned climate irregularities will continue throughout the season, stressing it was safer not to make "over-optimistic forecasts." That said, no one expects weather to be so turbulent so as to generate a harvest below 2012-13 levels.

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