Highlights

Beginning in mid-November weather conditions improved in growing regions for soybeans and sunflower seed affected by previous heavy rains, allowing producers to reactivate their planting intentions. Based on this development, Post maintains its production estimates for both crops as local sources indicate that no major area losses occurred. Excessive rains in late September/early November had led to damaging floods in some regions.

Soybean

Oilseed, Soybean (Local)

2014/2015

2015/2016

2016/2017

Market Begin Year

Apr 2015

Apr 2016

Apr 2017

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

13100

9852

Production

61400

60800

56800

56800

57000

55000

MY Imports

35

35

675

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

68390

66652

70400

65152

MY Exports

11669

11670

9500

10100

9250

9500

MY Exp. to EU

60

60

60

60

0

65

Crush

44890

45110

41400

41600

44300

41000

Food Use Dom. Cons.

0

0

0

0

0

0

Feed Waste Dom. Cons.

4175

5017

4390

5100

4455

5150

Total Dom. Cons.

49065

50127

45790

46700

48755

46150

Ending Stocks

10915

9252

13100

9852

12395

9502

Total Distribution

71649

71049

68390

66652

70400

65152

During late September/early November, one of primary growing regions (central-north La Pampa, northeast Buenos Aires, and south Cordoba provinces) for soybeans and sunflower seed was hit by excessive rains that in some circumstances led to damaging floods for certain crop areas. The damage led to serious concerns over this season's soybean and sunflower seed crop as well as the local livestock sector as reports estimated at least 600,000 hectares were under water or at great risk of. Moreover, The north La Pampa province experienced a record 19.7 inches of rainfall, with 15.7 inches falling in only 12 days. Such damage not only affected crop lots, but also hit roads and paths, limiting producers' access to croplands and nearby towns. By November 5, the Ministry of Agro-Industry declared these provinces in state of emergency. In Buenos Aires province, the districts ofProduction

Carlos Tejedor, Florentno Amerghino, General Villegas, and Rivadari were declared “emergency" and/or “disaster" areas by the provincial government. Such declaration allowed Buenos Aires producers to postpone the payment of provincial taxes and credits.

However, after some weeks, relief came thanks to moderating weather conditions. Local contacts and reports indicate that these areas should not affect the national production forecast for the 2016/2017 soybean crop as the areas in question have recovered. As of December 1st, 46 percent of the crop has been planted representing a 8.4 percent decline in crop progress compared to last season. Producers in north La Pampa and west Buenos Aires provinces reactivated sowing after days of no rain towards the end of month. Moreover, sowing reportedly accelerated greatly in the areas of central-north Santa Fe, Nucleo Norte, Nucleo Sur, and south

Cordoba provinces. The area still facing issues is concentrated around central and south Buenos Aires province as low temperatures and the lack of adequate moisture levels are delaying sowings. Based on the developments of the second half of November, Post maintains its harvested area of 19.3 million hectares – as it had already incorporated possible area losses in this estimate. The events of November do not necessitate any lowering of planting area nor yields at this time. As such, 2016/2017 soybean production is left unchanged at 55 million tons.

Crush/Trade

Based on updated crush figures, 2015/2016 soybean crush is revised up to 41.6 million tons.

Sunflower seed

Oilseed, Sunflowerseed

2014/2015

2015/2016

2016/2017

Market Begin Year

Mar 2015

Mar 2016

Mar 2017

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

554

144

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

3854

3446

MY Exports

63

62

300

305

118

80

MY Exp. to EU

13

20

250

20

15

0

Crush

2749

2750

2830

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

2884

2789

3054

3210

Ending Stocks

1038

636

554

144

682

156

Total Distribution

3901

3496

3738

3238

3854

3446

Production

Sunflower seed plantings are practically done, 97 percent of the crop has been planted. Sowings remain to be completed in areas of central and west Buenos Aires province along with north La Pampa province. Conditions in southeast Buenos Aires province continue to limit sowings and inhibit the growth of planted area due to low temperatures and low moisture levels present inadequate conditions for plantings. Moreover, these factors are inhibiting the wheat crop which will likely delay its harvest and thus the sowing of sunflower seed in theses areas. Producers in these areas are now waiting for new rains in order to advance plantings.

Overall, conditions appear to be very good for the crop. In the Chaco region –where 20 percent of thisseason's crop is planted – is experiencing adequate to optimal moisture levels with yield expectations above the levels of last season.Based on these developments, Post maintains is area harvested and production forecast for the 16/17 sunflower seed crop at 1.65 million hectares and 3.3 million tons, respectively.

Marketing

The Argentine Sunflower Association (ASAGIR) is reporting moderate increases in sunflower and products prices based on prices registered in Rotterdam and the Argentine Ministry of Agro-Industry. The Ministry recently published Free on Board (FOB) price indices for sunflower oil at USD 765 per ton and sunflower seed at USD 380 per ton (a 4.1 percent increase compared to last year). Argentine sunflower oil traded at USD 832.5 per ton in Rotterdam for November/December contracts, an increase of USD 2.5 compared to October.These developments are a positive sign for the sector who thanks to the removal of sunflower export taxes during December 2015 are aggressively expanding production (nearly a 35 percent increase in area planted) for the 2016/2017 season in the expectation of higher returns. As such, ASAGIR is working with its members to grow and market its crop in the best way possible. ASAGIR is advising its members that the two most important actions they can take to bolster the marketability of their crop is to avoid mixing different types of sunflower crops (i.e. high oleic and linoleic) and to avoid the use of insecticides to better market their product in world markets, especially the European Union. Specialists indicate that at least two seasons without insecticide use need to pass in order for Argentine sunflower seed to recover the confidence of the EU market. Sunflower producers and exporters seek to avoid shipment issues in the EU related to pesticide residues. Moreover, ASAGIR advises producers to consult with buyers if any insecticide application is planned in order to avoid a rejection of grain later on. In addition to this, the sector is advises producers to secure contracts if they plan to produce high oleic as a way to absorb the price premiums such crop has to offer.

Peanuts

Oilseed, Peanut

2014/2015

2015/2016

2016/2017

Market Begin Year

Mar 2015

Mar 2016

Mar 2017

Argentina

USDA Official

New Post

USDA Official

New Post

USDA Official

New Post

Area Planted

341

345

300

330

350

365

Area Harvested

341

341

290

290

350

360

Beginning Stocks

568

568

565

589

269

317

Production

1188

1188

930

930

1155

1190

MY Imports

0

0

0

0

0

0

MY Imp. from U.S.

0

0

0

0

0

0

MY Imp. from EU

0

0

0

0

0

0

Total Supply

1756

1756

1495

1519

1424

1507

MY Exports

848

833

915

870

900

900

MY Exp. to EU

487

465

540

450

520

490

Crush

278

277

245

252

270

270

Food Use Dom. Cons.

48

53

50

55

53

58

Feed Waste Dom. Cons.

17

23

16

25

17

27

Total Dom. Cons.

343

353

311

332

340

355

Ending Stocks

565

589

269

317

184

252

Total Distribution

1756

1775

1495

1519

1424

1507

Production

Industry publications report over 80 percent of this season's peanut crop is planted with current crop progress demonstrating a 5 percent increase in area compared to last season. In their December 1 weekly report, the Ministry of Agro-Industry reported 74 percent of peanut crop planted (nearly 225,000 hectares). This demonstrates an aggressive acceleration in peanut sowing as the Ministry's estimate indicate that planting progress as only 5 percent of crop was planted on November 3. Moreover, practically all peanut sowing has finalized in the primary production department (county-equivalent) of Rio Cuarto. The second most important department, Laboulaye, reportedly has 60 percent of its crop planted thanks to better conditions. Post maintains its 16/17 area harvest and production forecast at 360,000 hectares and 1.2 million tons, respectively. Although last season's harvest was complicated by rains near the latter part of the season, seed quality is adequate but not necessarily optimal. Nonetheless, local observers report satisfactory results with the peanut crop so far. Over the past three seasons, producers have dealt with peanut leaf spot caused by Cercospora arachidicola fungi, which is facilitated by rainfall. However, producers have perfected their controls against it. It is expected that the first application against this fungi to occur around the beginning of January, Producers are expecting a weak La Nina weather pattern season with the possibility of dry conditions near the middle of the summer during the month of January.

Investment in the Agriculture Sector

In August, the Argentine government commenced a tax amnesty program to bring billions of dollars of undeclared wealth– offshore and domestic – into the formal economy and expanding the tax base. As of November 21, Argentina's tax agency registered over USD 20 billion in assets, including more than USD 7 billion in cash. The government expects Argentines will disclose USD 50-80 billion by the final March 31 deadline.

This program has presented producers, agribusiness firms, and investors a unique opportunity to invest in the agricultural sector. Over the past few months, new funds have emerged that are specially designed to invest in the sector. These funds are particularly attractive as they provide a vehicle for investors and producers to reincorporate undeclared wealth into the formal economy, they operate in dollars, and deliver tax benefits. However, local reports have also indicated that some producers and investors are finding the program difficult. Activity in the real estate market for agriculture lands registered a slight drop in October, per the Argentine Chamber of Rural Inmobiliarias (Cair). The chamber attributes this drop to complex nature of the tax amnesty which they claim has postponed investment decisions.

In addition to the expected infusion of capital from previously undeclared wealth, investment is also coming from other sources. The World Bank's International Financial Corporation plans to loan USD 50 million to the Argentine agribusiness firm, Adecoagro, for the development of efficient and environmentally-friendly agricultural technologies. The investment will specifically be utilized to replace diesel-powered water pumps to electronic ones and expand/update the company's dairy operations.

Upcoming policy developments – especially higher taxes - are worrying the agriculture sector and may inhibit additional investments. Both the provinces of Buenos Aires and Cordoba are considering increases in rural property taxes. In addition to this, many members/associations continue to express their displeasure with the government not fulfilling its promise to reduce the soybean export tax by another 5 percentage points.