Argentina's soybean production estimates lower in 2017-18

03.07.2017

Argentina’s soybean production is estimated lower in 2017-18 as the increase in acreage slows and yields return to historical levels, according to a report from the U.S. Department of Agriculture’s Foreign Agricultural Service (FAS).

The market will be impacted by the gradual reduction of export taxes that begin in January 2018. Larger carry-in stocks are expected for the 2017-18 marketing year as producers store their supplies.

Total soybean acreage is estimated at 19.3 million hectares, an increase of 100,000 hectares due to a greater second crop soybean area. First crop soybean area is expected to decrease, displaced by corn and sunflower seed.

Production is forecast at 54 million tonnes with yields averaging 2.8 tonnes per hectare, lower than the yields of 2.96 tonnes per hectare in 2016-17.

Under the new tax reduction plan, beginning in January 2018, the soybean export tax will be reduced by 0.5 percentage points each month until December 2019. By the end of 2019, the soybean and soybean byproducts export taxes will be 18% and 15%, respectively, the FAS said.

“Industry analysts and producers now expect producers to hold on to their soybean supplies in an effort to hold off for a lower export tax rate and better prices,” the FAS said. “Local analysts have begun to estimate an increase in 2016-17 ending stocks as producers will use silo bags to store part of this year’s harvest and wait for the reduction of the tax. This hoarding of supplies is also being encouraged by local banks who are offering credit lines at 1% interest (in dollars) to producers who store their beans.”

The 2017-18 soybean crush is estimated at 44.44 million tons, up 8% from the 2016-17 crush estimate. A majority, about 75%, of Argentine soybeans are crushed for meal and oil, which is mostly exported. A portion remains in the country for domestic consumption, estimated at 2.9 million tonnes in 2017-18.

Demand for meal continues to increase due to expansion in the livestock and pork sector. Feed consumption of meal is forecast to increase to 2.9 million tonnes in 2017-18.

Soybean exports for 2017-18 are forecast up to 9.5 million tonnes as a result of greater exportable supplies due to stable production and higher carry-in stocks. This is an increase of 6% from last year.

Nearly 90% of whole soybeans are shipped to China. Other important markets include Egypt, Chile, Cuba, the United States and Venezuela.


world-grain

Readers choice: TOP-5 articles of the month by UkrAgroConsult