Crops better than expected Analyst says improved Argentine crop could offset smaller Brazilian crop
Argentina’s corn and soybean crops will likely be bigger than the market is anticipating, says an analyst who recently toured the country.
This could eventually put downward pressure on oilseed prices, including canola.
Bruce Burnett, CWB weather and crop specialist, said there has been a lingering market concern about the crop because it was hot and dry during seeding in December and the first half of January.
“Our conclusions were that it really didn’t impact the crops that significantly,” he said.
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Burnett toured more than 100 soybean fields in portions of Buenos Aires, Cordoba and Santa Fé, the country’s three largest corn and soybean producing provinces.
What he discovered is that many farmers held back on planting until rain arrived in January, and conditions have been ideal since then. Those late-seeded crops have excellent yield potential.
Also, the third of the crop planted early in October and November isn’t as bad off as many analysts thought. It has average or slightly above average yield potential.
The U.S. Department of Agriculture is forecasting 54 million tonnes of soybean production, but Burnett said it could easily be one to two million tonnes more if the weather co-operates.
Corn yields are also likely to be higher than the USDA is forecasting, but acreage could be lower because it appears that the dry conditions caused growers to seed more soybeans and less corn.
“Just visually, there was a lot of bean fields in a lot of areas and there’s no corn fields around,” said Burnett.
He said the lack of corn was very noticeable compared to last year’s crop tour.
That could mean an even bigger soybean crop is coming, which could eventually put downward pressure on soybean and canola markets but probably not until the new crop year.
Argentina’s larger-than-expected soybean crop will likely offset the recent reduction in Brazil’s crop.
The USDA shaved Brazil’s soybean crop by a million tonnes in its April supply and demand report, which follows a 1.5 million tonne cut in the March report.
“There will still be big supplies down there that need to be marketed over the next six months or so,” said Burnett.
The impact of the huge looming South American harvest will be muted by the current tightness in North American supply, but that could change by summer with a big anticipated U.S. crop in the ground and still plentiful supplies of South American soybeans.
It doesn’t help that Argentina has rampant inflation and currency devaluation, which is reducing grower willingness to sell a crop that is already starting to be harvested.
“With the inflation rate and the depreciation of the peso, they are metering the grain out,” said Burnett.
Export statistics show the country is off to a slow start despite higher-than-usual carryout from the previous year. It means there could be a big pile of soybeans left by the start of the new crop year.
Demand is also starting to dry up at today’s prices. Chinese importers recently defaulted on 500,000 tonnes of U.S. and Brazilian soybean shipments.
On the bright side, the currency devaluation meant Burnett’s plush hotel room in downtown Buenos Aires cost exactly half as much as the room he stayed at in Kindersley, Sask., a couple of weeks earlier.
“And let me tell you, there was no comparison,” he said with a laugh.
