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Production
Estimates and Crop Assessment Division |
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Production
Estimates and Crop Assessment Division |
October 21, 2002
Relative prices prior to planting favor sunflowers, but soybean expansion is expected to remain strong. As a result of the favorable relative prices, sunflower harvested area is expected to increase this season to 2.30 million hectares, up from 1.98 million last year and 1.89 million two years ago. The higher relative prices may be behind the large increases that have already occurred in sunflower plantings in the northern provinces of Chaco and Santiago del Estero, where planted areas are reportedly up 119 and 284 percent respectively. (See, "Argentina: Favorable Conditions for Planting Sunflowers," October 2, 2002) Planting in the northern provinces has been completed and is now beginning in the main sunflower areas of Buenos Aires, La Pampa, and Cordoba provinces.
The sunflowerseed/soybean price ratio in July, when Argentine farmers were preparing for the 2002/03 planting season, was higher this year at 1.14, above 0.97 last year and 0.86 prior to the 2000/01 campaign, using FOB Argentina prices. Meanwhile, the soybean/corn price ratio was fairly neutral at 2.10. This is about the same as last year’s 2.14, but down slightly from 2.24 prior to the 2000/01 planting season.
Despite price signals being neutral between soybeans and corn, harvested area for soybeans is forecast to increase 6 percent to 12.0 million hectares, while corn is forecast to decline 8 percent to 2.25 million. Farmers are expected to plant more soybeans because they are a lower input-cost crop than corn, an important deciding factor this year when farmer’s access to credit is restricted due to Argentina’s economic collapse. The switch from corn to soybeans now appears to be less than was expected a few months ago because of a government decision to have farmers repay previous input loans at 70 percent of dollar values stipulated in original loan agreements. This is a compromise position. With the 73 percent devaluation of the peso since last December, farmers would have preferred to repay last year’s input loans at the old exchange rate, while suppliers would have preferred repayment at the new exchange rate. The decision has resulted in credit being granted for input supplies to customers in good standing, but very little credit is available for capital investments.
Absolute prices in July were favorable for all three crops. FOB prices in dollar terms were up 10 percent for corn, 9 percent for soybeans and 27 percent for sunflowerseed relative to July 2001. With the exchange rate shift, prices in pesos are up 314 percent for corn, 307 percent for soybeans, and 378 percent for sunflowerseed. The export oriented agricultural sector is likely to hold up pretty well relative to the rest of Argentina’s economy during the current crisis. Recently released second quarter GDP results show agriculture and fisheries increased 4.2 percent from a year ago while construction was down 41.2 percent, and overall GDP was off 13.6 percent. Consequently, Argentina's ability to produce oilseed and corn commodities for the international market is expected not to be greatly compromised in the coming marketing year.
