The upcoming presidential election and troubling economic conditions have cast a cloud of uncertainty over Argentina grain and oilseed producers entering the 2019-20 crop season, according to an April 11 Global Agricultural Information Network report from the U.S. Department of Agriculture (USDA).
The report noted that during the 2018-19 marketing year, producers experienced a sudden increase in inflation, massive devaluation of the Argentine peso, and an increase in export taxes by three to six percentage points.
“As a result, producers are anxious to see how the economic and political situation will evolve in the next few months as they attempt to adjust their planting and marketing intentions to best mitigate risk,” the USDA said. “Producers indicate that if this economic decline continues and/or the likelihood of a candidate unfriendly to the agriculture sector becomes more likely, they may shift more to soybeans, leading to a net rise in crop area over the 2019-20 season.”
As it stands now, the USDA is forecasting soybean planted area to decline by 1% to 17.8 million hectares due to greater area competition from corn. At present, corn margins for next season are expected to be greater than those from first crop soybeans, leading to a minor reduction in soybean area.
Based on an expected average yield of 3 tonnes per hectare, the USDA forecasts soybean production to decline by 3% to 53 million tonnes.
Argentina’s soybean exports are forecast to increase by 4% in 2019-20 to 12.5 million tonnes due to greater exportable supplies and current trade conditions that are delivering higher returns for soybean exports in comparison to soybean products, the USDA said.