Argentina. Soybeans Update. Jan 2015 March 10, 2015

Post marginally lowers its soybean production area estimate to 20.8 million hectares. The 2014/15 crop is virtually 100 percent planted, and producers increased area this year but slightly less than analysts had initially speculated. Post maintains its production estimate at 57 million metric tons (mmt). December and January brought excellent precipitation patterns for most of Argentina's soybean producing provinces, which should lead to better-than-anticipated yields which will handily offset the reduction in Post's estimated planted area.

Producers and most agricultural input companies continue to state that they are operating in survival mode for 2014/15. Agricultural production input investments are minimal. Data on fertilizer use in soybean production, for example, indicates stagnation—and even decreased use—over the past three years. Yields have subsequently stagnated. One sector that should see growth is herbicides, as most producers cannot farm without them. Recent studies report that herbicide costs can now account for as much as 40 percent of overall production costs. The current survival policies may be necessary for producers with limited access to capital, but the policies will lead to increased production costs for the upcoming 2-3 years, when soil remediation will be necessary.

Post's estimated 2014/15 exports are at 10 mmt, in line with 2013/14 exports. In 2014, the Argentine Ministry of Agriculture reported that soybean complex exports grew 17 percent year on year. Soy exports served to prop up Argentina's otherwise diminishing agricultural export sector, which as a whole fell four percent by volume in 2014. Moving forward in 2015, commodity prices and what many in the market would view as an overvalued peso will render Argentine soybean exports less competitive on the global scale.

Post estimates 2014/15 crush at 41 mmt. According to the Argentine Ministry of Agriculture, a total of 37.9 mmt of soybeans were crushed in 2014, a record and 1.6 percent higher than the last crushing record, which was achieved in 2011.