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May 6, 2016

Argentina Lost 7.5% of its Soybean Acreage to Flooding

In the latest development in th'e ongoing problem of extensive flooding in Argentina, the Buenos Aires Grain Exchange reported this week that 7.5% of the soybean acreage in Argentina was damaged by the flooding and excessive rainfall during the month of April. They estimated that 785,000 hectares of soybeans were lost due to flooding and another 750,000 hectares were severely damaged. The exchange estimates that Argentine farmers had planted 20.1 million hectares of soybeans in 2015/16.

Much of eastern Argentina was subjected to three weeks of constant rain, high relative humidity, and cloudy skies during the month of April. The result was extensive flooding and very poor seed quality.

The weather was dryer this past week and farmers in Argentina made good progress in harvesting their soybeans which are now 41% harvested. This represents an advance of 17% for the week, but it is still 27% behind last year's pace of 68%. The corn crop in Argentina is 26% harvested compared to 29% that was harvested last year at this time. The farmers in Argentina will continue to harvest their soybeans first because soybeans are more sensitive to wet weather at harvest time than corn.

The Buenos Aires Grain Exchange left their soybean estimate unchanged in this week's report at 56.0 million tons and they indicated that they accounted for most of flood losses last week when they reduced their estimate by 4 million tons. They also indicated that their soybean estimate could still move lower in subsequent reports. Their estimate for the 2015/16 Argentine corn crop remained unchanged this week at 25.0 million tons.

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 nearly constant wet weather resulted in soybeans sprouting in the pod or rotting in the pod. The standard allows for 5% poor quality seed and the price is discounted 1% for each percentage of poor quality seed above 5%