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October 20, 2003
Price signals at planting time indicating the relative profitability of different cropping options available to producers in Argentina was fairly neutral between corn and soybeans, but favored an increase in sunflowerseed. However, soybean expansion is expected to continue, largely due to excessive rainfall affecting key Argentine summer crop areas, which has delayed planting of corn and sunflowers. Soybeans, which can be planted as late as January, are expected to benefit.
Relative prices of soybeans and sunflowerseed prior to planting were largely at decision-neutral levels, as was the corn/soybean price ratio (FOB Argentina prices in US dollars). In July, when Argentine farmers were preparing for the 2001/02 planting season, corn/soy price ratios were fairly neutral at 2.14, down from 2.24 last year and 2.62 in 1997/98, but up from1.74 in 1999/2000 and 1.55 in 1996/97. The sunflowerseed/soybean price ratio was also relatively neutral at 0.97, up from .86 last year and .89 in 1997/98, but down from 1.20 in 1999/2000 and 1.39 in 1998/99.
Additionally, absolute prices in July were not especially favorable for oilseed crops. Soybeans, at US$188 per ton, were 6 percent higher than they were last year, but 34 percent lower than in 1997/98. Sunflowerseed, at US$183, was 20 percent higher than last year, but still 40 percent down from what it was in 1998/99.
From July to October, FOB prices in Argentina increased 5 percent for sunflowerseed, declined 9 percent for soybeans, and remained unchanged for corn, as crop estimates and demand prospects changed in northern hemisphere countries. However, the price picture likely changed too late to cause Argentine producers to greatly alter their planting intentions.
Initial planting intentions for corn, soybeans, and sunflowerseed are being revised. The optimal planting window for corn closes in mid-December, while the window for sunflowers closes in early December. Soils saturated by unusually heavy rainfall need to dry in many areas before planting can resume. Time remains, however, for soybean planting, which can continue into January. Producers unable to plant corn or sunflowers will likely view soybeans as their last chance to get a crop in this season.
Consequently, soybean area is expected to continue expanding, albeit at a slower rate than in 2001/02. Area harvested is projected at 11.0 million hectares, up from 10.3 million last year and 8.6 million in 1999/2000. Soybean harvested area has increased every year since 1990/91 when it was 4.8 million hectares. Despite the damp planting conditions, sunflowerseed is forecast to come back slightly this year after last year when Argentine farmers deserted the crop in droves. Sunflower area is forecast at 2.0 million hectares in 2001/02, up from 1.9 million hectares in 2000/01, but well below the record 3.5 million hectares harvested in 1999/2000.
