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Argentine corn planting area propelled higher by policy optimism![qrcode]()
Dec. 3, 2015
Argentina's farmers are racing to plant more corn now a new farm-friendly government is taking power, increasing the area planted by 10 percent over previous estimates, and making more exports likely from one of the world's biggest suppliers.
Mauricio Macri will become president of Argentina, one of the world's biggest corn and soybean suppliers, on Dec. 10 after winning last month's election on a free-markets platform with promises to cut taxes and reduce controls on grains exports.
Farmers now have a six-week window in key growing regions to plant corn before mid-January and they are rushing to buy seeds and fertilizers. Extra output, combined with Macri's promise of a more competitive exchange rate, will likely boost exports.
"You can already see farmers changing their planting plans. Over the last week we have seen that they might plant 300,000 to 400,000 hectares more corn than the 2.6 million hectares we previously imagined," said Alfredo Paseyro, executive director of the Argentine Seed Merchants Association (ASA).
Pablo Torello, who manages 2,500 hectares in the bread-basket province of Buenos Aires, said he upped corn plantings to 480 hectares from an originally planned 300 when Macri beat ruling party candidate Daniel Scioli on Nov. 22.
"Macri made his farm policies clear during the campaign, so when he won we were ready to invest in corn. We had the money set aside," Torello said. Corn costs about $535 per hectare to grow, 80 percent more than soy, Argentina's main cash crop.
Torello estimates that his neighbors in the northern Buenos Aires municipality of Bragado are increasing corn planting by 10 to 15 percent due to the expected shift in government policy.
More than 90 percent of corn planted in Argentina is genetically modified and GMO seeds have seen a sales jump since the Nov. 22 election, as have related agro-chemicals and the weed killers glyphosate and atrazine sold by companies like Monsanto.
Agroservicios Pampeanos (ASP), a $300 million per year fertilizer and pesticides company, is already fielding an increase in calls from growers asking about corn-related products, said chief executive Miguel Morley.
"A 10 percent increase is a reasonable estimation, which would mean 300,000 additional hectares before the end of planting in mid-January," he said, based on the volume of calls.
This year's planting in the country's main corn belt of northern Buenos Aires province, south-east Cordoba and southern Santa Fe has been completed, but there are six weeks left to sow in secondary corn provinces like Santiago del Estero, Salta and northern Cordoba.
Argentina is the world's No. 4 corn exporter, No. 3 soybean supplier, and a major source of wheat for neighboring Brazil. Macri's policy team says overall grains output could climb 30 percent to 130 million tonnes by the end of his first term in 2019.
The Buenos Aires Grains Exchange had put Argentina's 2015/16 corn acreage at 2.72 million hectares before Macri's win, well under the estimated 3.4 million in the 2014/15 season. No one interviewed by Reuters expected acreage to match last season even with the incentive of a Macri victory.
Macri has said he will eliminate the 20 per cent tax now levied on corn exports and the 23-percent tax on wheat, as well as end quotas that outgoing President Cristina Fernandez has used to curb the amount of both crops that can be shipped overseas.
David Hughes, who manages 6,500 hectares in western Buenos Aires province, said he already upped corn planting by 8 to 10 percent since Macri's strong showing in the Oct. 25 first round of voting.
"The elimination of taxes and curbs on corn exports is enough to incentivize planting," Hughes said.
Armando Allinghi, head of Argentina's CIAFA fertilizer merchants chamber, also saw Macri's Oct. 25 performance as a trigger for interest in corn-related products.
"Since the results came in on Oct. 25, we have registered an increase in inquiries about corn-related inputs, which is why we expect to see an increase in planting," Allinghi said.
But while farmers plant extra corn, it will take a more favorable exchange rate to persuade them to sell, Hughes said.
Macri has said he will allow the black market rate, at which many local transactions are made, and the official rate, currently around 55 percent stronger, to converge.
"We know the exchange rate will change," Hughes said. "That will affect us positively, if we sell the day after the devaluation, not the day before. So there's still some uncertainty there."
Source: Reuters
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