Sep 27, 2022

Dry Weather in Argentina Encourages Switch from Corn to Soy

Author: Michael Cordonnier/Soybean & Corn Advisor, Inc.

Argentina received some scattered showers earlier last week, but they were not enough to end the worst drought in decades. Many areas remained dry last week and the near-term forecast does not look encouraging. Rainfall is expected to remain limited across Argentina this week favoring far northwestern areas. Showers may become more widespread in the 6-10 day period, but amounts are expected to be light. Additionally, it has been cold in Argentina with scattered frosts as late as last week.

The corn in Argentina was 3% planted as of late last week compared to about 8% last year.

If dry weather persists in Argentina, it is entirely possible that farmers may switch some of their intended corn acreage to soybeans instead. The weather during October will eventually determine how much corn might be switched to soybeans.

Any switch from corn to soybeans would occur in the first phase of corn planting which starts in September and ends about the end of October. During this first phase, farmers generally plant about 40% to 45% of their corn acreage. For the last two growing seasons, this early planted corn was negatively impacted by La Nina induced dry conditions during November and December when the corn was pollinating and in early grain fill.

The second phase of corn planting starts in December and ends about mid-January and the later planted corn has recorded higher yields the last two years. If the early corn planting continues to be delayed, farmers may opt for less corn and more soybeans. If the soybean acreage increased in Argentina in 2022/23, it would be the first time in seven years.

At this point, a little history is in order. Prior to 2015, the Argentine government interfered in the corn export market by capping the amount of corn exports. This resulted in low domestic corn prices, which was the goal of the program, and farmers were uncertain about the future price of corn because of the export restrictions. There were no export restrictions on soybeans and farmers could estimate the future prices for soybeans by referring to the Chicago Board of Trade. Therefore, they planted more and more soybeans until it was almost a monoculture.

Since 2015, farmers in the Pampas area of Argentina have been reducing their soybean acreage and increasing their corn acreage. The two main driving factors for this was the higher export taxes levied on soybeans and a desire for a more sustainable crop rotation. During the 2014/15 growing season, farmers in Argentina planted 6.5 times more hectares of soybeans compared to corn. Farmers knew this was unsustainable from an agronomic point of view and they wanted a more balanced rotation. During the 2021/22 growing season, farmers in Argentina planted only 2.2 times more hectares of soybeans compared to corn.

Both the Rosario Grain Exchange and the Buenos Aires Grain Exchange have indicated that they feel the 2022/23 corn acreage will decline and the soybean acreage will increase. The number being discussed currently is a switch of maybe 200,000 hectares, but the situation is very fluid and that number may change.