Argentina: Prices Favor Soybean and Sunflower Planting
Over Corn
The estimated area for Argentine soybean and sunflowers
is forecast to
rise for 2005/06 due to high relative prices prior to
planting. Soybean area is
forecast to rise to a record 15.2 million hectares this year, up from 14.4
million hectares in 2004/05. Sunflower
area is forecast to increase to 2.2 million hectares, up from 1.89 million last
year, but well below areas seen in the late 1990’s.
Corn area is forecast to drop from 2.7 million hectares in 2004/05 to 2.4
million this year.
July price ratios show soybeans and sunflowerseed had an
advantage over corn. The
soybean/corn price ratio was 2.50, the highest July soybean/corn price ratio
since 1997. The July sunflowerseed
/corn price ratio was 2.72, the highest since 1998.
The increased sunflower plantings, up 16 percent from last year, are
occurring despite dry conditions in northern Argentina which caused farmers to
abandon some of their sunflower planting intentions. Soybeans
are a shorter season crop and are sometimes substituted if the sunflower planting window
is missed.
Prices in July, when farmers were making their
planting decisions, were relatively favorable for soybeans and sunflowerseeds.
Soybean prices FOB Argentina were at US$252 per ton, up from US$245 last
year and US$217 in July 2003. Sunflowerseed
prices were also favorable at US$275 per ton, up from US$245 in July 2004.
Correspondingly, soybean and sunflower area are expected to rise this
year with soybean harvested area at 15.2 million hectares, up from 14.4 million last
year, and
sunflowers at 2.20 million hectares, up from 1.89 million last year.
It should be noted that soybean area has increased every year for the last 15 years, even in 1999/2000 when prices were not as
favorable. The
relatively favorable price this year is providing an especially strong incentive,
such that soy area is forecast to increase by 800,000 hectares.
Argentina’s soybean planting was 39 percent complete as
of November 10, according to the Argentine Ag Secretariat, and will continue
into January. Sunflowers and corn are
planted earlier than soybeans in Argentina. On November 10, sunflower planting
was 72 percent finished, and corn planting was 68 percent complete.
Argentine soybean production for 2005/06 is forecast at
40.5 million tons, up 1.5 million from last year’s record crop of 39.0
million tons. Production is expected
to rise based on higher harvested area resulting from the relatively favorable
prices. Sunflowerseed production is
forecast at 3.8 million tons, up 6 percent from last year, and corn
at 17.3 million tons, down 11 percent.
Yields of soybeans and sunflowerseed do not show a clear
trend over the last 10 years, and
for 2005/06 are forecast at 2.66 and 1.73 tons per hectare respectively, near
their 5-year averages. Corn yield,
meanwhile, has been rising steadily, and is forecast at 7.21 tons per
hectare, near the 10-year linear trend but well above the
5-year average of 5.93 tons per hectare.
Over the last six years, the soybean/corn price ratio for
commodities being exported has been consistently above 2.0 (considered favorable
to soybeans) and soybean area has risen steadily.
Corn area has decreased in four years out of the last six, though it
increased strongly last year.
Between July and October, FOB Argentina soy prices declined 8 percent to
US$231per ton, sunflowerseed prices fell 4 percent to US$264, and
corn fell 5 percent of US$96. The lower prices, if they
remain stable, will affect the profitability of this season’s crops but
are not expected to strongly affect harvested area.
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