2016-17 Argentine soy area to drop 4%

New tax regime gives corn an edge.

A year can make a huge difference in politics as in farming, and a lot has changed since the last time Argentine producers were calibrating their planters. The biggest change is likely the huge cuts in the country’s export taxes on ag commodities—a fact that is likely to help corn rob acres from soybeans in 2016-17.

In fact, the Buenos Aires Grains Exchange says the Argentine corn area is likely to be up a whopping 25% this season, to 11.1 million acres, versus last season’s 8.9 million. And observers say you can chalk most of that increase up to the fact that President Mauricio Macri erased the export tax on corn shortly after taking office last December, but only reduced the export tax on beans to 30% — lopping five points off the rate.

Directly from soybeans

Those corn acres have to come from somewhere, and the biggest projected loser is 2016-17 soybeans, a crop likely to shed up to 4% of its area according to observers. In fact, Rodolfo Rossi, head of an Argentine soybean association, told a reporter that “If there ends up being a bigger corn area, it will come directly from soybeans.”

Rossi estimates Argentina’s 2016-17 bean crop could lose as many as 1.2 million acres compared to last season, dipping to 49 million acres.

Added to the pressure Argentine producers are feeling to switch to corn is the fact that many of them have put soybeans too heavily into their rotations in recent years, despite the export tax. After all, until recently, there was an export tax on the crops that competed with beans, too—a fact that made a move to other crops less interesting than now. And at least the soybean price was effectively dollarized, establishing something of a hedge against the loss of value of the peso despite the last administration’s artificially high peso-dollar exchange rate.

Agronomics

So for agronomic reasons alone, there’s good reason to think corn would swipe a few 2016-17 Argentine soy acres, even if it weren’t for the slashing of the export taxes.

Years of Argentina’s attempts to keep a lid on food inflation by crushing ag exports with heavy taxes have come—mostly—to an end. And that is not only food for Argentine producers making their cropping decisions, but for you in your marketing decisions.


The opinions of the author are not necessarily those of Farm Futures or Penton Agriculture.

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