May 4, 2016

2015/16 Argentine Soybeans Lowered 1.0 mt to 56.0 Million Tons

The situation in Argentina is still undetermined. The weather turned dryer for a few days late last week and over the weekend, but harvest progress remains slow. Most of the harvesting that occurred last week was outside of the previously flooded areas. The Buenos Aires Grain Exchange reported that the soybean harvest progressed to just 24% as of late last week. That represented an advance of 8% for the week and it is way behind the 62% harvested last year at this time. This is the slowest soybean harvest in probably a decade or more.

The problem in Argentina is trying to estimate how many acres of soybeans were flooded and the extent of the losses in those flooded areas. It is estimated that about one-third of the soybeans will have record yields this year because of the very good growing season and the lack of flooding during April. Another one-third of the crop could still have decent yields, but there could also be significant problems with lower quality. The last one-third of the crop could either be a complete loss or have very significant damage due to the extent of the flooding. It is this last one-third of the crop that is still unknown.

A big problem in Argentina is going to be poor quality seed. Many regions went 20 straight days with nearly 100% relative humidity, no sun, and relatively high temperatures. The result was a lot of soybeans sprouting and rotting in the pods. Reports from the Port of Rosario indicate that trucks arriving from the flooded areas contain soybeans that are 20% to 30% poor quality, which is resulting in price discounts of 15% to 25%. The standard allows for 5% poor quality seed and the price is discounted 1% for each percentage of poor quality seed above 5%.

Therefore, the 2015/16 Argentine soybean estimate was lowered 1.0 million tons to 56.0 million and I have a lower bias going forward. It is possible my soybean estimate might still go down another 2-3 million tons, but unfortunately, we may not have an accurate estimate of the Argentine soybean crop until all the crop is harvested.

The Buenos Aires Grain Exchange estimates the nationwide soybean yield last week at 3,600 kg/ha (52.2 bu/ac), which is down from the prior week's estimate of 3,660 kg/ha (53.9 bu/ac). They left their soybean estimate unchanged at 56.0 million tons, but they also indicated that their estimate might move lower with a full accounting of the flood loses.