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2015/16 corn acreage in Argentina expected to decline significantly
Aug. 24, 2015
Numerous reports out of Argentina indicate that Argentine farmers will reduce their corn acreage in 2015/16 by 10% to 30%. The Buenos Aires Grain Exchange recently estimated that the corn acreage would decline 20% to 2.72 million hectares.
There are numerous reason why corn is losing popularity in Argentina including: low prices for corn, the high cost of inputs such as seed and fertilizers, high land rents, high cost of freight from distant production areas to port facilities, limited credit for production loans, lower yields relative to soybeans, and government interference in the corn export market that can artificially lower the domestic price of corn.
In the past, the government has limited corn exports any time they thought that lower corn production could result in higher feed costs and thus higher meat prices for consumers. As soon as they limit corn exports, domestic corn prices decline due to an over-supply in the domestic market. Inflation in Argentina is estimated at approximately 30% (that is a guess because no one know for sure) and the government is trying everything possible to limit inflation. As a result, Argentine farmers don't know what the future price of corn will be because of this government interference. Therefore, they are switching some of their intended corn acreage to soybeans instead.
Corn production practices in Argentina have also been changing in recent years as farmers plant their corn later and later. The first corn planting usually starts in late September or early October depending on the spring weather. Producers then generally don't plant much corn during the month of November because if they did, the corn would be pollinating during January which can be the hottest and driest time of the year. They then resume planting corn in early December and finish planting by approximately late January.
By the end of October in 2014, Argentine farmers had planted approximately 35% of the corn while the 5-year average at the end of October was 47%. The percent planted by the end of October has been declining for the last five years as follows: 60% planted in 2009/10, 65% in 2010/11, 45% in 2011/12, 38% in 2012/13, and 28% in 2013/14. It would not be surprising if only 30-35% of the corn in Argentina is planted by the end of this October.
An additional concern this year is the possibility that El Nino could result in heavy rains during the late winter or early spring. Much of Buenos Aires, Santa Fe, and Cordoba provinces are currently saturated due to heavy rains over the last several weeks. Many areas have already reached their annual rainfall totals and the spring rains have yet to arrive. Areas of Buenos Aires province received up to 300 mm (12 inches) over the last ten days. If these conditions persist for another thirty days, the early corn planting could be delayed.
Source: Soybeans&Corn Advisor
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