Tuesday, 26 January 2010

Soyabean Crops in Argentina...Very Interesting

Argentina is a beautiful & fascinating country. Agriculturally it is an emerging low cost global giant that will continue to affect the UK & Europe. Argentina has long been respected as a low cost beef producer with most beef being pasture grazed. The Malbec red wine from Mendoza is of the highest quality. You might not be totally surprised if I tell you that Malbec goes very well with Argentinean beef. What an amazing combination!

However in recent years it is the soyabean production from both Argentina & Brasil that has made the rest of the agricultural world sit up & take note. USA has the largest number of hectares in soyabean crops. Brasil is No.2 & Argentina number three in world production. The major importers are China & Europe. So what happens in Argentina, Brasil & China has a direct impact on the price UK farmers pay for feed protein.
Year on year increases in soyabean crop areas & yields in Argentina have been a staggering 27% pa. Soya in Argentina has been expanding at the expense of other arable crops & beef grazing land. In 2008 the Argentina president slapped a substantial export tax onto soyabean farmers. This is based on the land value. Argentine farmers were insensed & staged massive strikes by blocking the transport system for over 30 days.
In 2008-9 Argentina suffered a very serious drought that severely affected the output of soya & all other arable crops.
This year however has been a good one & production is forecast to be up 66% on last year & a record 53million tonnes most of which is exported.....mainly to Europe. Brasil too is having a very good year with an expected 65million tonnes. Harvest starts in April thru to June.
On Bella Vista Estancia, established in 1860 (Estancia is the Argentine word for Ranch or farm) south of Buenos Aires, I was shown the soya crop by Agricultural Consultant Diego Fevre. He explained that the soya yield is very much influenced by the number of nodules on each plant stem. Eight nodules is good, 10 is exceptional. If the weather is kind this season could be exceptional for the soya growers. Virtually all of the soya grown in Argentina is GM (RR.....Round up Resistant). Farmers lease a high proportion of their land, own very little machinery & get contractors to do most of the work. Minimum till is accepted practice on most Estancia.
So what are the market prospects for soya? Production in the USA, Brasil & Argentina is at record levels. Only extreme heat & lack of rain can dent the Argentinean output. Demand from China remains high.
However the general consensus view is that soya prices will fall due to the record production in South America. It seems likely that with wheat stocks world wide at very high levels the same might be expected of wheat prices. Much will depend on currency changes.
Argentina, Chile, Uraguay & Brasil are becoming very important agricultural countries. Opportunities for dairying look really interesting too. How about a trip to South America guys & girls?....the Malbec wines of Mendoza are worth sampling I can tell you from first hand experience. I am thinking this coming autumn.....any starters?