Dry Argentine fields may favour planting soya instead of corn

September 08, 2013

Soyabean
Soyabean

Dry weather in Argentina is pushing farmers toward planting more soya as a lack of rain joins a long list of reasons not to sow corn in the South American grains powerhouse this year, according to crop experts. The dry spell comes on top of soaring corn cultivation costs, swooning Chicago corn futures and government export curbs that distort both corn and wheat prices in Argentina.

— Drop in Chicago futures another reason to not plant corn

— China open for Argentine corn, but will there be supply?

Planting is set to start in about one week, but the dry conditions are raising questions about production just as Argentina emerges as a corn supplier to commodities-hungry China. The first big cargo of Argentine corn arrived in China last month, establishing the South American country as a competitor for that booming market long dominated by the United States.

But with dry weather in Argentina’s vast Pampas farm belt, where wheat was recently planted and corn is set go into the ground at mid month, growers must decide whether to risk lower corn yields by waiting for rain before planting or opt for cheaper and easier-to-grow soya. Argentina is the world’s No 3 exporter of both crops.

“Corn has become riskier because of the lack of rain. This will push farmers toward planting soya instead,” Buenos Aires-based agricultural economist Manuel Alvarado Ledesma said. Forecasters say the corn belt in Buenos Aires, Cordoba and Santa Fe provinces should get moderate showers this weekend before normal rain patterns start forming toward the end of the month. Most of the area got no rain at all in August and the parts that did got 50 percent less than in August 2012.

“Climate models forecast good rains from early October till the end of February, benefiting middle and late corn and soyabean plantings,” said Eduardo Sierra, weather expert with the Buenos Aires Grains Exchange. Soya planting starts in November. Rains over the days ahead could prompt some corn sowing. But farmer may nonetheless favour lower-risk soya, which is less sensitive to weather, cheaper to seed, and is exempt from government export curbs that apply to corn and wheat.

“If the rains are insufficient or do not come by the last week of September or early October, more fields will be dedicated to soya and only a portion to late-planted corn,” the Rosario grains exchange said in a report on Friday. The dry conditions also threaten wheat. “Lack of rainfall in the agricultural heartland has started to deteriorate wheat crop conditions,” the Agriculture Ministry said in its weekly report on Friday.

Inflation and financing costs have increased under President Cristina Fernandez, who was re-elected in 2011 on promises of increasing government’s role in Latin America’s No 3 economy. The president limits the amount of wheat and corn that can be exported to ensure ample food supplies at home. Farmers say the curbs, which can be raised and lowered throughout the year, make crop planning impossible and kill profits by cutting competition among buyers.

Global prices have also strengthened the case for planting soya. Chicago corn futures prices are down more than 30 percent so far this year while soya futures are up 1 percent. In the United States – the world’s top corn producer and exporter – farmers are starting to harvest what is widely forecast to be their largest crop ever. If the forecasts prove correct it would indicate continued low international prices.

US soyabean prices have meanwhile been on the rise as recent dry weather may crimp production and possibly keep US soyabean stocks tight for another year. For these reasons Argentine farmers may favour soya this season despite the risk that growing too much of the oilseed may disrupt the crop rotation needed to keep soils fresh. Analysts say the upcoming soya crop could break Argentina’s production record of 52.7 million tonnes set in 2009/10.

The country is expected to harvest a record 27 million tonnes of corn in the upcoming 2013/14 season, up from 26.5 million tonnes in the previous crop year, according to the US Department of Agriculture (USDA). But delayed planting, because of dry fields, could lessen corn’s potential yields. To get maximum yields, Argentine corn should be planted between September 15 and October 15. “The longer you wait after that, the lower the yield,” said Esteban Copati, an analyst at the Buenos Aires Grains Exchange.

Argentine farmers expect China to soon approve their one remaining variety of genetically modified corn yet to be certified for import. The South American grains powerhouse wants to push quickly into the Chinese market while its neighbour and fellow corn exporter Brazil is stuck on the sidelines, waiting for Beijing to approve its genetically modified corn. China could import 20 million to 30 million tonnes of corn a year to cover supply shortages, a researcher with a government think tank said on Thursday, as much as four times current levels. Courtesy Reuters

Published in ZaraiMedia.com

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