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Rain won't help Argentina soy crop, analyst says

CHICAGO, Illinois(Agriculture Online)--As they enter the critical growth stage of "flowering", a large part of the Argentine soybean plants near a point of beyond repair, a Buenos Aires market analyst says. In contrast, Brazil's soybean crop is faring well.

María Alejandra Linares Figueroa, a farm advisor and market analyst with AACREA, an Argentina research firm, tells Agriculture Online the soybean crop will suffer severe yield loss.

AGOL: Can you characterize just how severe the Argentina drought is, and its impact on the soybean crop?

Figueroa: The drought is the most severe since soya has been developed in Argentina. The impact is seen everywhere (widespread), except for an small area in Córdoba and Bs As).There are many areas that couldn't be planted, from the 18,4 millions hectares that where initially to be planted only 16, 1 succeeded and most of them aren't in a very good condition.
Argentine soybean production will be under international reports, probably, because the drought is worst than it seems (long and intense). Today, we don't expect a production over 40 million tons, when at first we expected between 50-51 Mt, some private reports, the most pessimists, said that production will be under 37 Mt and this number could be lower if rainfall it is not generalized, meanwhile there are no national estimates.

AGOL: Can you give me an example of how many acres of soybeans will be affected by the drought? What amount of yield loss will be lost?

Figueroa: First, you have 2.3 million hectares that couldn't be planted and less yield in the ones that were planted. During 2006/07, national yield was 2971 kg/ha with a production of 47.4 million metric tons, and last year was Y=2822 kg/ha, P=46,23 Mt. Today we are expecting less than 2500 kg/ha.

AGOL: Is your crop done growing, or with some rain can you get some yield back?

Figueroa: Soybean plants are still growing but the damage is done, and most of it can't be reversed. It doesn't matter how much it rains, at least 30% of the potential yield is, already, lost. Today is raining in some production areas, but it is not good enough, most areas need at least 80mm and it is raining only 20, just to keep some plants alive.

AGOL: What are other farmers saying about how much yield they are losing?

Figueroa: Losses are huge in some areas and reach 60% of the potential yield. In general, farmers are really worried, the situation is complicated as there is no yield possible to reverse a negative result in most companies.

AGOL: Some say even though Argentina is having a drought, Brazil is still doing very well, and the world still has plenty of soybeans? What is your perspective on that issue?

Figueroa: If the world is missing about 10 million metric tons, something has to change, not only to Argentine farmers but also for the rest of the world. It is a percentage of the world production that vanish.
Brazil production is yet to be realized, there are different opinions about it. For example: USDA 59Mt (last month 60), Oil World 57.5 Mt (last month 59Mt) and CONAB 57.7. So, there is drought impact in some areas of Brazil, and we are in a crucial moment of the crop progress (flowering).

AGOL: Let’s talk about rain. Will you be getting rain the rest of this week, the weekend, and into next week? What kind of weather do you expect?

Figueroa: Some storms are expected, but if they are not important the yield will go on falling.

AGOL: Can you tell me if the Argentina farmers will strike again? I’m hearing you might? And if so why strike?

Figueroa: Farmers situation is critical and it is probable that they would strike again. In general, production is expected to be 25 Mt under and prices fell as well and farmers couldn't take price doing forward sales (new rules were applied by the government that complicated commercial system). Also our production has export taxes that has a similar effect as the drought in the farmers result (u$s).

So, farmers have "3 Droughts" (points of impact in the economic result):
- drought (less production)
- export taxes (less price as an income tax),
- international prices(less price).
It is like the perfect storm, even though the chances are low, this year all three have happened. Until last year, we could count on export taxes but we were seeing good prices and good weather conditions.

The "3 Drought" scenario generates a really bad predisposition in farmers and confrontation. Besides, government's messages, they are looking for the headlines instead of looking for solutions. For example, yesterday one of the announcements to reduce transaction costs in 0,32 u$s/ha (transportation), when only export taxes represent 328 u$s/ha. These are the reasons why it is probable that farmers go on strike since the early days of March, they are trying to minimize the losses and they will do anything that it is in their power to do so.


Meanwhile, in Brazil drought issues have been limited to the southern states, namely Parana, according one market analyst there.

Parana farmers are expected to harvest around 10.3 million metric tons, 1.6 million less than last year, according to an estimate that AgRural, a Brazilian marketing firm, released this week. "It is all due to the lack of moisture in December and early January, because the planted area is the same. Parana is the number 2 soybean producer in Brazil," the analyst says.

Rio Grande do Sul, the Brazil's southernmost state, and No. 3 in soybean production, has yield losses as well, but is expected to make up for increased production. In 2009, Rio Grande do Sul is expected to produce 8 million metrtic tons of soybeans compared to 7.8 million in 2007/08. Another state with problems is Mato Grosso do Sul, where the drought until December reduced crop prospects from 4.8 million to 4.3 million tons (4.6 million last year), the analyst says.

Elsewhere in Brazil, weather conditions have been near perfect in 2008-09, according to the Brazilian analyst. "In Mato Grosso, 6% of the total area was already harvested last Friday (23rd) and the average yield is around 51.5 bags per hectare (46 bushels per acre), a good number for this state. We expect 10% for this Friday (30th), but the work can be slowed next week by rain."

For Mato Grosso, the No. 1 soybean state, 2009 soybean production is estimated at 17.3 million tons, slightly less than last year (17.8 million tons), when the yields were above normal.

For Goias, the No.4 soybean producing state, is expected to raise 6.6 million tons of soybeans, compared to 6.7 million last season. Overall, the Brazilian crop is seen at 57.5 million tons, 4% below last year’s 60 million tons. The planted area is at 21.7 million hectares, up 2% compared to 2007/08.

CHICAGO, Illinois(Agriculture Online)--As they enter the critical growth stage of "flowering", a large part of the Argentine soybean plants near a point of beyond repair, a Buenos Aires market analyst says. In contrast, Brazil's soybean crop is faring well.

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