Argentine farmers will echo their US peers in favouring soybeans in the next sowings campaign, with worries over a hike in grain taxes exacerbating the boost to the oilseed’s appeal from its lower fertilizer needs.
Argentine growers will lift their sowings of soybeans for 2022-23 by 650,000 hectares to 17.0m hectares, the highest in six years, the US Department of Agriculture’s Buenos Aires bureau said.
“The increase in planted area will largely come at the expense of corn acreage which is expected to fall,” the bureau said, foreseeing area seeded with the grain falling by 50,000 hectares to 6.75m hectares.
While modest in scale, such a fall would represent a break with a long-term trend in the South American country of expanding corn sowings, representing the first decline in nine years.
From 2013-14 to 2021-22, Argentine corn area doubled – largely at the expense of soybeans.
‘High fertilizer costs’
The return of soybeans to favour will come largely “in response to high fertilizer costs”, the bureau said, with the oilseed, which fixes its own nitrogen from the atmosphere, far cheaper to grow than corn at a time when nutrient prices are at multi-year highs”.
It added that “there is a strong concern that due to high world fertilizer prices and complicated logistics fertilizers needed for the 2022-23 corn crop could not be fully available.”
Soaring nutrient values have been viewed as behind a switch by US farmers too to soybeans in the newly-started spring plantings campaign.
US growers will lift soybean area by 3.8m acres to 91.0m acres this year, contrasting with a 3.9m-acre fall to 89.5m acres in corn seedings, the USDA believes.
‘More political risk’
In Argentina, the bureau noted too that seed prices for – hybrid – corn are “significantly higher” than for soybeans, for which “farmer-saved seed is widely available”.
Overall, while corn should provide higher gross margins in many areas, “the advantage for corn is not as pronounced as last season,” leaving some farmers “leery of investing so much money in a country without widespread crop insurance or other government safety net.
“Upfront costs for soybeans can be half as much as corn.”
Furthermore, corn carries “more political risk” in terms of the potential for Argentina’s government, which has a history of targeting agriculture for taxes, lifting grain export levies.
“Though soybeans face higher export taxes than corn, wheat, or barley, (33% versus 12%) these export taxes are at their upper legislative limit.
“In contrast, grain taxes could be raised by decree to 15% and the government has implemented a new system of export quotas on corn and wheat which could be used to limit exports.”
Production, export forecasts
The bureau forecast Argentine soybean production in 2022-23 hitting a four-year high of 51.0m tonnes – rebounding by 10.0m tonnes from the drought-affected levels of this season.
This forecast assumes a return to “normal” weather, although the bureau acknowledged that “some analysts are predicting a possible third year of La Niña, a weather pattern which traditionally leads to drier growing conditions in Argentina”.
Corn production in 2022-23 will reach 52.0m tonnes, up 500,000 tonnes from this season when Argentina witnessed “significant cuts in harvested area and yield due to a very dry summer”.
Argentine soybean exports will more than double next season, to a three-year high of 6.50m tonnes, with corn shipments up 500,000 tonnes at 38.0m tonnes.