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September 15, 2015

Argentina's 2015/16 Production - Soybeans Unchanged, Corn -15%

The picture in Argentina is not nearly as optimistic as it is in Brazil. The soybean acreage in Argentina is expected to either hold steady or increase slightly while the corn acreage is expected to decline significantly. The weather over the next two months could have a major impact on the acreage of both crops. Most meteorologists are forecasting heavy rains during September and October due to the strong El Nino. If those rains do occur, it could disrupt the early corn planting and convince farmers to plant even less corn and more soybeans.

The current governmental policies and the upcoming presidential elections could also influence the acreage mix. The current policies favor soybeans over corn because the government has a long history of meddling in the corn export market whenever domestic corn supplies look threatened. The government has never interfered in the soybean export market and in fact, they encourage more soybean and soybean product exports because of the revenue generated by the export taxes. In the upcoming presidential elections, President Kirchner cannot run for reelection and farmers are hoping that the opposition party will win because of their campaign promises to be friendlier toward agriculture. Currently it is a toss-up between the current party and the main opposition.

Argentina 2015/16 Soybean Production - There continues to be a difference in opinion concerning the 2014/15 soybean crop in Argentina, but I am going to estimate that the 2014/15 soybean acreage was 20.5 million hectares with a total production of 60.0 million tons. For the 2015/16 growing season, I am going to estimate that farmers in Argentina will plant 20.9 million hectares of soybeans (+400,000 hectares or +2%) and that the total soybean production will be unchanged at 60.0 million tons. The soybean yields last year were record high and I do not expect that to be repeated this year, thus the unchanged production estimate.

Argentina 2015/16 Corn Production - There is an even greater difference in opinion concerning the corn crop in Argentina for both last year and the upcoming growing season. I am going to estimate that the 2014/15 corn acreage in Argentina was 3.2 million hectares with a total production of 25.5 million tons.

Everyone is expecting that the corn acreage will decline in 2015/16 and the estimates range from -10% to -30%. I am going to estimate that the farmers in Argentina will plant 2.8 million hectares of corn in 2015/16 (-400.000 hectares or -12.5%) and the total corn production will be 21.6 million tons (-3.9 million tons or -15%). The corn yields are expected to be lower than the record yields achieved last year due to a lower use of technology and that the weather during the growing season that will not be as ideal as it was last year.