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Commodity Intelligence Report

April 19, 2006

Argentina 2005/06 Corn Update

Argentina's corn yield has increased from 1998 until 2004, but has decreased severely this year due to adverse weather. Production has fallen this year based on area and yield decreases.Argentina's 2005/06 corn crop is highly variable, with much corn in poor to fair condition, and a lesser amount in good to excellent condition, as witnessed during a crop tour of Argentina's agricultural heartland by USDA Foreign Agricultural Service (FAS) analysts in early March 2006. Overall, lower than normal yields are expected. USDA's April 2005/06 corn production estimate is 14.0 million tons, down from 15.5 million last month, as a reflection of the lower than expected yields throughout Argentina due to the extremely variable growing season. USDA’s current area forecast of 2.2 million hectares, down from 2.3 million last month, reflects the planted corn area lost to frost, heat and drought, and the increase in planted area used for silage and wet corn for on-farm feed.  Yield is forecast at 6.4 tons per hectare which is down from 6.7 tons per hectare last month, and down from 7.4 tons per hectare last year.

This year’s weather included several extreme events which were particularly stressful to the corn crop as compared with other crops such as soybeans and sunflowers, which were in less vulnerable stages of development.  First, two unseasonable frosts occurred in December, freezing 60 - 70 percent of some producers’ corn in Tandil and Tres Arroyos. Photo 1 below shows corn that had been damaged by frost near Tandil city. The corn on the left survived the frost but was stunted. The stunted corn was expected to yield 7-7.5 tons per hectare. The corn on the right was the replanted after the original corn was killed by frost. The replanted corn was expected to yield 6 tons per hectare due to lateness of planting. Some corn that was killed by the early season frosts was replanted to soybeans in other fields in this area.

Some corn in Tandil was stunted by frost, as shown on the left, while some corn in the same field was killed and needed to be replanted. In southern Cordoba, southern Santa Fe, and northern Buenos Aires, severe drought was experienced in December and was followed by extreme heat (35 to above 40°C) during the first week of January. Some relief was received from adequate rains immediately following this hot and dry spell; however, some areas were completely missed, bringing further variability of this year's crop.   

While corn fields seen by FAS analysts ranged from poor to good condition, most fields’ expected yields were less than what was hoped for at the beginning of the season.  For example, in high areas (i.e. on top of hills) in Venado Tuerto, yields were estimated at 3-4 tons per hectare instead of the 10 tons per hectare that was expected earlier in the season.  In the good (i.e. low) areas of (shown in photo 2) corn yields were expected to be 11-12 tons per hectare.  In Tres Arroyos (shown in photo 3) corn usually yields 10 tons per hectare but this year will be closer to 6 – 7 tons per hectare. In Totoras, Cañada de Gómez, yields were generally estimated at 7 – 8 tons per hectare, yet the farmers had been hoping for yields of 10 tons per hectare before the severe dryness and heat of December and January. Corn near Balcarce (shown in photo 4) was in excellent condition and was expected to yield 10-12 tons per hectare; however, the normal yield for this corn was a little higher at 11-12 tons per hectare. (These yield figures include the corn for silage as well as for grain).

Corn yielding 10 - 12 tons per hectare in Venado Tuerto.Corn near Tres Arroyos was damaged by frost and dryness.Corn near Balcarce in Tandil was expected to yield very well at 10 - 12 tons per hectare.

What makes the corn harvested area and production estimate particularly complicated this year is that more corn area is being cut for silage, since yields are lower than expected in many areas.  In a typical year the amount of corn cut for silage is approximately 20-22 percent of the planted area.  Additionally, some area is used for seed and some planted corn is harvested at high moisture (24-31 percent) and stored short-term for on-farm cattle feed (see the filling of silo bags with wet corn for cattle feed in photo 5).  Farmers typically use their best yielding corn fields for silage and harvest grain from the remaining lower-yielding fields.  Corn production in the area of Cañada de Gómez was expected to be 50 percent less Filling of silo bags with wet corn in Venado Tuerto.than what was expected at the beginning of the season because of an increase in corn chopped for silage and to decreased yields.  Not only had this area witnessed a decrease in corn area for grain, because of an increase in planted area devoted to silage, but also a general shift from corn production to more profitable soybeans has taken place over the last few years in cropped area.  This seems to be a common trend in many areas of Argentina.

Another topic influencing yield and profits that was discussed during FAS travel through Argentina's cornbelt was the use of technology, specifically the use of genetically modified (GMO) seed and irrigation. In some areas a significant amount of GMO corn seed is being used; for example, 50 - 60 percent of planted corn in Río Cuarto is GMO corn and most of that is Bt corn.  Roundup Ready (RR) seed is more expensive than non-Roundup varieties, thus many farmers do not plant RR corn.  Irrigation is not very common for field crops in Argentina because it is expensive.  Typically irrigation costs $0.65/mm/ha and is applied at rates of 150 – 180 mm over the growing season for corn.  The irrigated fields visited by FAS analysts were typically corn fields (in Cristopherson, Venado Tuerto and Balcarce, Tres Arroyos), and a few peanut and soybean fields in central Cordoba near Rio Cuarto.  It was common to see irrigated corn devoted to “grow-out” or for seed.  In Balcarce, Tandil, non-irrigated and irrigated corn yields were 9-10 and 13-14 tons per hectare, respectively (with 150mm of irrigation water). In these irrigated corn fields, seeding density was increased by 10 percent and a little higher rate of fertilizer is used.

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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