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January 4, 2012

Is the Current Situation in Argentina as bad as it was in 2008/09?

I have been asked numerous times if the situation in Argentina is as bad as it was during the 2008/09 growing season. That is a tough question to answer at this point because it is an ongoing situation. At the present time, I would say generally across the country it is not as bad as it was in 2008/09, but we could get there with about two more weeks of adverse weather.

I went back and looked at all my weekly reports from the 2008/09 South American growing season and in Argentina that year, we started out the season estimating that Argentina would produce 50.5 million tons of soybeans and they ended up producing 32 million tons. For corn we started out at 19.5 million tons and they ended up producing 15 million tons.

During the 2008/09 growing season, I lowered the Argentine corn estimate three times in November (total of 2.0 million tons), three times in December (total of 1.5 million tons), twice in late January (total of 2.5 million tons), and then the estimate actually increased a little at the very end of the growing season. For soybeans I didn't start lowering the estimates until later in January and early February and then there was a steady progression lower throughout the remainder of the growing season. The biggest single reduction for both corn and soybeans in Argentina came during the last week of January. This year in Argentina, we didn't start lowering the corn estimate until late December.

Unfortunately, there are specific locations in Argentina where currently it is probably about as bad as it was three years ago and one of those areas is where the provinces of Buenos Aires, Santa Fe, and Cordoba meet, which is in the heart of the production area. If the weather pattern would revert to more normal level of rainfall within two weeks, then there will be significant losses, but I don't think it would be as bad as in 2008/09. If the month of January ends up being as dry as December has been, then a repeat of 2008/09 is possible.