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Commodity Intelligence Report
January 14, 2014

Dryness Continues in Argentina; Soybean Plantings May Increase, with Corn Lower

Argentina is forecast to harvest 20 million hectares of soybeans in the 2013/2014 soybean season and produce 54.5 million metric tons. Dry conditions in October limited sunflower and corn plantings and slowed final corn planting in the country. November rains replenished upper soil moisture ahead of soybean planting. Dry and hot conditions limited soil moisture reserves in December. Less corn area and more soybean area are expected as a result.

Figure 1. Warm temperatures during the first week of December have continued with some areas having temperatures of 30 to 40oC in the third week of December.

Figure 2. Surface soil moisture in the western delegations of Buenos Aires has continued to decrease under hot temperatures and slight, scattered showers. Late-planted soy may suffer non-uniform emergence if rain showers do not improve conditions.

Figure 3. Conditions began to get even drier during mid-December 2013. Areas of cropland showed vegetation stress.

Figure 4. By the end of December 2013, large areas of Argentina, particularly in southern Buenos Aires and La Pampa provinces showed dry soils and stressed vegetation from high temperatures.


Rio Negro Program Supports Development of Irrigation System

These drying conditions occurred coincidentally with the announcement of proposed new irrigation incentives mentioned at a recent, workshop in the Rio Negro region. Rio Negro Province is located south of Argentina’s main soybean producing provinces. The workshop was organized by the provincial Agricultural Services Program (PROSAP) with the Rural Change unit (UCAR). The workshop encouraged development of irrigation systems, because adding irrigation in the region would optimize use of crop production land and possibly help meet the grain quantity goals suggested in the Argentine Strategic Plan for Agrifood for more grain production in the short-term plan. The December workshop established the groundwork for developing new, efficient irrigation while boosting investment in the region. The Argentine government has been developing plans for more irrigation. Use of irrigation in this region could potentially expand and increase soybean production as well.

Soybeans Produced for Export and Processing

Soybean production in Argentina is highly dependent on export of soybeans and products. A value-added approach in Argentina places emphasis on using more of the soybean crop by processing it into products. Argentina imposes an export tax of 35 percent on soybean exports compared to 32 percent for soybean oil and meal; consequently, over 70 percent of soybeans are processed. Biodiesel exports are taxed at the rate of 20.67 percent. This approach encourages production to go into soymeal and soy oil--some of which can be used domestically for further processing into biodiesel and feed. Processing of soybeans into soy oil for use in biofuel has made Argentina the world’s largest biodiesel exporter, requiring ramping up of soybean production. Reports suggest that Argentine exports of biodiesel from soybean oil will climb conservatively up to 450,000 metric tons in the three months of October through December of this year. Argentina supports biodiesel exports as well as local consumption, and has called for a 10 percent blend level of soy-based biofuel by the end of the year. Soybean area in Argentina has steadily increased over the past quarter century, and a larger planted area is predicted again this year in Argentina. Only 395 million bushels were grown on only 12.4 million acres 24 years ago. Last crop year, Argentina produced 1,815 million bushels on over 47.8 million acres, a 360 percent increase in production from 24 years ago. Soybean, biofuel, soy oil, and soy meal exports are all expected to increase. Potential improvements to railroads, highways and country roads as well as shipping ports, irrigation, crop genetics, crop rotation, and field fertility improvements are all factors which may lead to continued expansion of soybean production in Argentina.
For additional information, contact Dr. Denise McWilliams, Crop Production analyst, USDA-FAS-OGA-IPAD, 202-720-0107.

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

For more information contact Denise McWilliams | Denise | (202) 720-0107
USDA-FAS, Office of Global Analysis

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