Highlights

The Argentine government announced it will delay a previously planned reduction of soybean export taxes until 2018, while implementing a new plan to bolster soybean production in the northern part of country. 2016/2017 soybean area harvested is revised down to 19.3 million hectares due to greater competition from alternative crops - corn and sunflower - and lower than expected wheat plantings. 2016/2017 sunflower area and production are left unchanged. 2016/2017 peanut production is expected to recover after a difficult 2015/2016 harvest. Post estimates peanut harvested area at 360,000 hectares.

Soybeans

Oilseed, Soybean (Local)

2014/2015

2015/2016

2016/2017

Market Begin Year

Apr 2015

Apr 2016

Apr 2016

Argentina

USDA Official

New Post

USDA Official

New Post

USDA Official

New Post

Area Planted

19400

20000

19700

20250

19450

19500

Area Harvested

19340

19300

19530

19530

19450

19300

Beginning Stocks

10214

10214

10915

9252

11605

9202

Production

61400

60800

56800

56800

57000

55000

MY Imports

35

35

600

600

300

300

MY Imp. from U.S.

0

0

0

0

0

0

MY Imp. from EU

0

0

0

0

0

0

Total Supply

71649

71049

68315

66652

68905

64502

MY Exports

11669

11670

10100

10100

10650

9500

MY Exp. to EU

60

60

60

60

0

65

Crush

44890

45110

42250

42250

44300

41000

Food Use Dom. Cons.

0

0

0

0

0

0

Feed Waste Dom. Cons.

4175

5017

4360

5100

4455

5150

Total Dom. Cons.

49065

50127

46610

47350

48755

46150

Ending Stocks

10915

9252

11605

9202

9500

8852

Total Distribution

71649

71049

68315

66652

68905

64502

Argentine Government Announces Delay of Soybean Export Taxes Until 2018 and Initiative to Bolster Initiative to Bolster Soybean Production in Northern Argentina.

On September 3, President Macri along with Agro-Industry Minister Buryaile announced in will delay the previously planned reduction of export taxes on soybeans until 2018. Beginning January 2018, the export tax will be reduced by 0.5 percentage points each month until December 2019. By the end of 2019, the soybean export tax will be 18 percent, down from its present level of 30 percent. In addition, President Macri explained his plan to bolster soy production in ten northern provinces by providing a refund equivalent to 5 percent of the FOB price of soybeans beginning in March 2017. These provinces are the focus of the Plan Belgrano – an economic development initiative for northern Argentina. The provinces include Corrientes, Misiones, Chaco, Santiago del Estero, Formosa, Tucuman, Salta, Jujuy, La Rioja, and Catamarca. Post will continue to monitor the situation and report on any new developments. At present, it is early to speculate on the short and long-term implications of this policy announcement. Post will develop analysis on possible effects as it evaluates the sector's reactions in the upcoming weeks.

2016/2017 expected area harvested is revised down to 19.3 million hectares due to greater competition from alternative crops - corn and sunflower - and lower than expected wheat plantings resulting in lower 2nd crop soybean area. Adverse weather conditions, crop damage, and harvest delays forced a number of producers to abandon their plans to plant wheat for the 2016/2017 winter crop season. As such, area originally designated for 2nd crop soybean after the wheat crop is lowered. Based on the changes to area and an average yield of 2.85 tons per hectare, Post revised 2016/2017 production down to 55 million tons.

Producers enter the season with relatively good margins according to contacts. Overall production costs are manageable as agrochemicals costs are generally lower while freight and fuel costs are slightly higher, according to contacts.

Moreover, producers are in better financial shape generally after the 2015/2016 season after the government devalued the Argentine peso by 50 percent and lowered export taxes by 5 percentage points for soybeans and their byproducts. The new policy environment and along greater financial resources - personal savings and/or credit – has led to higher demand for technology and interest in long-term investments. One example is the demand for farm machinery, which experienced a 3 percent increase in sales during the first half of 2016 compared to the same period the year before. Driving this sales uptick is the increased demand for planters which represent over 45 percent of the increased sales of farm machinery, followed by harvesters, tractors, and implements

Crush and Exports

2016/2017 crush is revised down to 41 million tons based on lower soybean supplies. 2014/2015 crush are revised up to 45.1 million tons to reflect updated data, 2016/2017 exports are revised down to 9.5 million tons based on lower soybean suppliers. 2014/2015 exports are revised slightly to 11.67 million tons to reflect updated data.

Sunflowerseed

Oilseed, Sunflower (Local)

2014/2015

2015/2016

2016/2017

Market Begin Year

Mar 2015

Mar 2016

Mar 2016

Argentina

USDA Official

New Post

USDA Official

New Post

USDA Official

New Post

Area Planted

1440

1300

1300

1250

1650

1675

Area Harvested

1440

1240

1270

1200

1650

1650

Beginning Stocks

740

740

1038

636

474

149

Production

3160

2755

2700

2600

3300

3300

MY Imports

1

1

0

2

0

2

MY Imp. from U.S.

0

0

0

0

0

0

MY Imp. from EU

0

0

0

0

0

0

Total Supply

3901

3496

3738

3238

3774

3451

MY Exports

63

62

300

300

118

80

MY Exp. to EU

13

20

250

20

15

0

Crush

2749

2750

2910

2735

3000

3150

Food Use Dom. Cons.

0

0

0

0

0

0

Feed Waste Dom. Cons.

51

48

54

54

54

60

Total Dom. Cons.

2800

2798

2964

2789

3054

3210

Ending Stocks

1038

636

474

149

602

161

Total Distribution

3901

3496

3738

3238

3774

3451

2016/2017

The removal of export taxes for sunflower and its by-products (formally at 32 and 30 percent) has lifted the crop's prospects for the 2016/2017 season. Area harvested is expected to increase by almost 38 percent on significant area expansions in northeast Argentina (particularly Chaco and Santa Fe provinces), Buenos Aires and La Pampa provinces. Based on an expected planted area of 1.6 million hectares, the Grains Exchange of Buenos Aires estimated that 30.9 percent of this season's crop has been planted, estimated at 500,000 hectares. Towards the northern parts of the country, sowing has finalized specifically the NEA region central-north Cordoba and central-north Santa Fe provinces. Thus far, the crop in these areas is experiencing good conditions with adequate moisture levels and good sanitary health. In general, crop progress in this region is between V6-V10 levels or 6 to 10 leaves on the crop. Part of the reason crop conditions are excellent thus far is due to preventive weed and pest controls that were applied at the beginning of the season. These expectations fall in line with Post and USDA's estimates and thus 2016/17 area harvested and production are left unchanged at 1.65 million hectares and 3.3 million tons.

This season, sunflower is expected to take area from those marginal areas that previously produced soybeans. Comparatively, sunflower has higher margins especially as it faces no export taxes. Sunflower is also a preferred choice as it more resistant to the lack of water, which makes it especially valuable in the northern part of the country which tends to be dryer and during an expected La Nina season. While the southeast of Buenos Aires does present significant risks of excess moisture, proper crop management can curb those risks, according to local experts. Moreover, producers believe sunflower is also a more stable choice for marketing and yields reasons, as suggested by a recent study that sunflower yields in Argentina are historically more stable than soybean ones. This decision to switch these soy areas to sunflower is also expected deliver agronomic benefits as these areas undergo crop rotation after years of back-to-back soybean plantings.

At present, there are minor doubts over whether there is enough seed to support such a significant growth in production. Some contacts have indicated that intended planting may be limited based on the availability of seed. However, the general consensus of most industry analysts is that there is enough seed to support such growth.

The sunflower sector has put particular focus in developing high oleic sunflower in order to receive a higher premium on world markets, primarily Europe. As such, the Argentine Sunflower Association (ASAGIR) has initiated an information campaign that urges producers not to mix high oleic sunflower materials with linoleic or conventional sunflower in order to avoid commercialization issues if the materials mix. ASAGIR is also working with the producers to maintain high quality in order to maintain their market in the European Union – a market that is willing to pay a premium for higher quality sunflower.

2016/2017 exports are revised down to 80,000 tons as the sector plans to export less sunflowerseed and focus more on oil exports. Crush is revised up to 3.15 million tons.

Sector observes have begun to examine the future of the sunflower sector in the Argentina. ASAGIR has explained that Argentina will not become the largest producer of sunflower oil as it was in 2000, when it dominated over half of the world market. ASAGIR cites changes that have occurred in Argentina and in the world, particularly Ukraine, as the cause. Moreover, ASAGIR goes on to state that the crop will not return to the area it once had at 4 million hectares with production around 7 million tons. Instead, the sector is could reach a maximum of 2 million hectares with output of 4 million tons4.

2015/2016

2015/2016 production is revised down to 2.6 million tons based on local production data sources. Crush is revised down to 2.74 million based on current crush estimates and lower sunflower seed supplies.

2014/2015

2014/2015 production is revised down to 2.76 million tons, reflecting the data from local private sources.

Peanuts

Oilseed, Peanut2014/20152015/20162016/2017
Market Begin YearMar 2015Mar 2016Mar 2017
ArgentinaUSDA OfficialNew PostUSDA OfficialNew PostUSDA OfficialNew Post
Area Planted341345300330350365
Area Harvested341341290290350360
Beginning Stocks587587595589334317
Production1188118893093011551190
MY Imports000000
MY Imp. from U.S.000000
MY Imp. from EU000000
Total Supply177517751525151914891507
MY Exports833833870870875900
MY Exp. to EU520465490450450490
Crush278277245252270270
Food Use Dom. Cons.485350555358
Feed Waste Dom. Cons.212326252727
Total Dom. Cons.347353321332350355
Ending Stocks595589334317264252
Total Distribution177517751525151914891507

After a difficult season, prospects are looking better for the peanut sector in 2016/2017. Post estimates planting area at 365,000 hectares, almost 11 percent higher compared to the previous season. The new season's area will return to average levels of the past few years. Based on these developments and an average yield estimated at 3.3 tons per hectare, production is revised up to 1.19 million, 3 percent higher than USDA's official estimate.

Producers are entering in a new season with various dynamics at play. On the one hand, agrochemical inputs are less expensive while in the other land rents have increased by over 36 percent. The country is expecting a significant increase in peanut production for the season while reports indicate that China and the United States (Argentina's main export competitors) will deliver a larger crop. While a few select processors have decided to maintain production levels, the majority of producers are accelerating production as prices for high quality peanut products in the European Union keep peanut production lucrative.

The rapid advance of resistant and tolerant weeds has endangered the profitability of farming systems, forcing producers and technicians to rethink rotation schemes, diversify modes of action and chemicals. Some input companies have responded to the situation releasing new herbicides and fungicides that combat weeds like Conyza bonariensis (asthmaweed), quitensis amaranthus, and fungi such as Sclerotinia sclerotiorum.

Press reports indicate labor and contract service costs (sowing, harvesting, chemical applications, etc.) for peanuts may go through additional readjustments. The Association of Contract Service Providers of Cordoba has expressed displeasure with service rates that are currently being offered to their members, expressing that they are below costs. Moreover, they claim this year's rate increases are much lower than the ones seen in past. This is alarming for the contractors as production is expecting to increase 2016/2017

Peanut production is concentrated in three provinces – La Pampa, Cordoba, and San Luis – with over nearly 93 percent production concentrated in the southern part of Cordoba province, primarily in the departments (counties) of Rio Cuarto, Juarez Celman, General San Martin, and Tercero Arriba.

2015/2016

Harvest of the 2015/2016 crop continues in La Pampa province and is near completion in Cordoba province. Adverse weather conditions throughout the season resulted in yield losses (almost 8 percent less than previous season) and crop damage due to low temperatures and excessive water levels. According to the Grains Exchange of Cordoba, these conditions led to a loss of 47,000 hectares, leaving just over 289,000 hectares available for harvest. Based on recent average yield estimates around 3.2 tons per hectare, the Cordoba Grains Exchange estimates 15/16 production at just over 928,000 tons, a reduction of 22 percent from the previous season. Based on these developments, 2015/2016 production is left unchanged at 930,000 tons.

As for the conditions of the harvested crop, it is estimated that 68 percent of the harvest grain is classified as Type 1 with internal mold build-up and ice, while 32 percent of the crop is reportedly “Type 2" with mostly external mold.