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Commodity Intelligence Report
April 17, 2006

Argentina 2005/06 Oilseeds Update

Soybean area and production has steadily been rising in Argentina, as shown by this bar and line graph.Given the overall fair to excellent state of Argentina's soybean crop, as witnessed by USDA Foreign Agricultural Agency (FAS) analysts during a crop tour in Santa Fe, Cordoba, and Buenos Aires, USDA's April estimate for Argentina's 2005/06 soybean production is a record 40.5 million tons, unchanged from last month. Harvested area is estimated at a record 15.2 million hectares, which is also unchanged from last month. USDA's estimated soybean yield of 2.66 tons per hectare is near the 5-year average. As of April 6, soybeans were 32 percent harvested, as compared to 33 percent last year.  Unlike corn, soy suffered little damage due to frost, dryness, and/or heat, because soy, which is planted later than corn, was not in a vulnerable stage of development during the extreme weather. Early planted first-crop soybeans suffered more than later planted soybeans; however, strong yields ranging from 2-3.2 tons per hectare were expected on many of the farms FAS analysts visited in Venado Tuerto, Tres Arroyos, and Tandil.  Later planted first-crop soybeans and early planted second-crop soybeans were in fair to excellent condition. 

As of early March 2006, the first-crop soybean harvest was underway near Cristoferson, Venado Tuerto, where yields of 3 – 3.2 on average were expected (see photo 1 below), however, some early planted first-crop soy was yielding low and there were some problems with green beans. A first-crop soybean field in Venado Tuerto.In Tres Arroyos, first-crop soybean yields were estimated to be over 2 tons per hectare with many areas yielding over 3 tons per hectare. Near Tandil city, yields were expected to be over 3 tons per hectare for first-crop soy and approximately 1.2 tons per hectare for second-crop soy.  In these fields, 50 percent of the soybean crop was replanted due to frost.  Now, it is more like second-soy in terms of development and yield will likely be reduced by 20 percent.  However, many fields near Tandil city looked very good with plants having over 30 nodes per plant and 3 pods per node. Second-crop soy in this area had around 11 nodes.  Last year, first-crop soy yielded 2.8 – 2.9 tons per hectare in this area, which illustrates the very good condition of this year's crop.  First-crop soy near Balcarce looked excellent with some plants having as many as 46 nodes. Some second-crop soybeans were behind indevelopment in this area because planting had been set back due to a delay in the wheat harvest.  Some sclerotinia and “soca” worm problems were seen near Tandil city and Balcarce, however, yield potential was not significantly affected.

Sclerotinia affected field near Tandil.Sclerotinia affected soybean plant shows withered looking stem.Healthy second crop soybean in Tandil.

Above: Sclerotinia affecting soybeans in Tandil will reduce yield by 2 percent in this field (photo 2); a close-up of a sclerotinia-affected soybean plant (photo3); a soybean field in excellent condition expected to yield over 3 tons per hectare near Tandil (photo 4).

Soybean Expansion and Increasing Cropped Area
Total cropped area in Argentina has steadily risen over the last 10 years. The total cropped area in Argentina has risen over the last 10 years.  In 1994/95, total harvested area was approximately 15.7 million hectares; today total harvested area is nearly 25 million hectares for grains, oilseeds, cotton, and rice.  According to some sources, three phenomenon are responsible for the increase in cropped area:  biotechnology, no-tillage practices, and the current wetter phase of the climactic cycle.  First, biotechnology has resulted in increasingly shorter cycle soybeans, which have allowed double-cropping in areas previously planted with one crop per growing season.  Many soybean farmers previously planted maturity groups 5, 6, and 7, but now can use maturity groups 3 and 4 which not only have a shorter cycle but yield more than the older varieties.  A maturity group 2 soybean is even grown experimentally in some areas.  (It should be noted, however, that these shorter-cycle soybeans do not always perform as well in adverse growing conditions as their older counterparts.)  Many areas in the northern provinces, which have a growing season of approximately 270 days have adopted a double-crop system.  Areas in the south, which have a much shorter growing season of approximately 180 days, are also adopting a double-crop Intercropped soybean with wheat in Balcarce.system with the advent of shorter maturity varieties and practices such as intercropping (see photo 5 to the left showing intercropped soybean growing through wheat stubble.). 

Intercropping is still mainly done on an experimental level, but if widely adopted in the upcoming years, Argentina’s planted area may continue to increase. Intercropping also has the potential to increase yields by increasing the length of the growing season for the intercropped plants. Intercropped soybeans are referred to as "1.5 soybeans" because the length of their growing season is between the growing seasons of first and second-crop soybeans. The intercropped soybeans shown in the photo to the left are near Balcarce, were planted a month before second-crop soybeans in that area.

Unlike double-cropping, which has led to increased planted area on the same area, no-till technology has allowed areas to be cropped which were previously unsuitable for agriculture, such as in the expansion areas of the north and west.  No-tillage farming has increased dramatically in Argentina and in many areas, throughout Córdoba, Santa Fe, and Buenos Aires.  The adoption rate, as seen by FAS analysts, in these areas appeared to be 100 percent.  No-tillage has allowed previously unsuitable (i.e. dry) lands to be farmed by increasing water retention and infiltration, and reducing production costs, making the “break-even” point lower in less productive areas.  A third reason for the increase of cropped areas is the general increase of precipitation in many areas due to an agriculturally-favorable, moister phase of the climactic cycle.  According to some meteorologists, this moist phase should last until 2050.  While some believe that many agricultural areas in Argentina are in a moist phase, Chaco, southern Córdoba, southern Santa Fe and parts of Buenos Aires, witnessed severe dryness over the last growing season.  Time will tell if this moist phase comes to fruition.  Nonetheless, total cropped area – that considered expansion area and that considered “virtual” area (i.e. double-cropped area)— has proven to be on the rise. The total expansion land may be a fraction of Argentina’s total agricultural area, however combined with double-cropping, it has significantly increased the number of hectares which have agricultural potential, possibly leading to an increase in planted area for more years to come than previously thought.

Currently, total planted area is estimated at approximately 28 million hectares, and soybean area makes up 57 percent of this total area.  Seed technology, including shorter cycle soybeans and Roundup Ready technology have led to the major reason soybeans make up such a large percentage of the total area— increased profitability over other crops.  According to one large farm in northern Buenos Aires province, the approximate cost of production (excluding land rent and contracted harvesting services) for each crop in dollars per hectare were the following: corn: $222; wheat: $167; sunflowerseed: $112; first-crop soybeans: $117; second-crop soybeans: $81. What makes soybean more attractive to many farmers is a decreased need for fertilizer. Typically wheat and corn are fertilized and soybean is not.  Sunflowerseed, by comparison, requires little fertilizer.  Fertilizer is expensive and that has also contributed to less area being planted to wheat and corn in 2005/06.

USDA's April forecast for Argentina's 2005/06 sunflowerseed production is 3.8 million tons on 2.2 million harvested hectares; yield is forecast at 1.73 tons per hectare which is near the 5-year average. In early March in Tres Arroyos, sunflower harvest was underway.  Sunflowerseed yield started low at around 1.4 – 1.5 tons per hectare in the areas further from the coast in Tres Arroyos delegation, but areas closer to the coast were witnessing yields of 2.2 – 2.5 tons per hectare.  Near Tres Arroyos city, yields were being registered at a high 3.1 tons per hectare.  In economic terms, a 3.1 ton per hectare sunseed yield is the same as a soybean yield of 3.5.  Near Tandil city some sunflowers were yielding 3.2 tons per hectare. Some of the variability in sunflowerseed yield was due to dryness which particularly affected the early-planted sunflower fields.  Later planted crops will likely yield higher.  Some of the variability in sunflowerseed in this area of southern Buenos Aires province is also due to soil and temperature variability from more inland shallow soils to the deeper coastal soils.   Tres Arroyos produces 22 percent of Argentina's sunflowerseed production, while Tandil is the second largest producing delegation at 10 percent. Fifty percent of Argentina's sunflowerseed production is in Buenos Aires province.

Sunseed damaged from frost and rain during pollination near Balcarce.Sunseed ready for harvest near Tres Arroyos.

Above: Sunflowers affected by frost and rain during pollination decreased expected yield in this field near Balcarce to 2.5-3 tons per hectare (photo 6); sunflower field near Tres Arroyos expected to yield 3.1 tons per hectare (photo 7).

Most of the peanut area in Argentina is from the center to the south of Córdoba province. Specifically, 20 percent of the peanut production is in central Córdoba, and the rest comes from the southern half of Córdoba. Twenty years ago there were approximately 2500 peanut farmers in Argentina and now there are only 480.  Soybeans have gained favor over peanuts because of profitability over other crops including peanuts, and the fact that peanut farming is quite specialized in terms of agronomic practices and the machinery required.  According to a peanut producers association in Córdoba, the approximate cost of production for soybean is $300 per hectare versus $600 for peanuts (these figures include land rent of approximately $150 per hectare). While 2005/06 witnessed a decrease in area planted to peanut from the previous year, Argentina’s peanut planted area will likely stabilize at around 200,000 – 220,000 hectares given demand for the crop.  USDA's April estimate of 2005/06 harvested peanut area is 160,000 hectares.

Graph showing harvested peanut area which hit a high in 1996/97 and has since stabilized around 160,000 to 200,000 hectares over the last five years.High yielding peanut plants near Riou Cuarto.

Above left: harvested peanut area hit a high in 1996/97 and has since stabilized near 160,000 hectares. Above right: two peanut plants from two peanut fields; the field producing the plant on the left was expected to yield 3.5 - 4 tons per hectare while the field producing the plant on the right was expected to yield over 4 tons per hectare (photo 8).

In southern Córdoba, critical dryness at the end of December threatened peanut yield. Because of this dryness, growth of much of the peanut crop had slowed and was currently behind in development as of early March.  Warmth and dryness was needed in March for the crop to catch up to normal in terms of development.  Currently USDA forecasts Argentina's peanut yield at 2.4 tons per hectare, down from last year's record yield of 2.8 tons per hectare, but near the five-year average.

Current USDA area and production estimates for grains and other agricultural commodities are available on PECAD's Agricultural Production page or at PSD Online.

For more information contact Nicole Wagner | | (202) 720-0882

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