May 25, 2018

Rosario Grain Exchange lowers their Argentine Crop Estimates

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

Crop estimates in Argentina continue to decline as a result of the severe drought during the growing season and then subsequently a prolonged period of wet weather during harvest that resulted in further losses and poor seed quality.

The Grain Exchange in Rosario for example, lowered their estimate of the 2017/18 soybean and corn production in Argentina once again. Citing soybean yields that are below earlier expectations, they are now estimating the 2017/18 Argentine soybean production at 35.75 million tons compared to last month's estimate of 37.0 million tons. Their estimate of the 2017/18 Argentine corn production was also lowered this month to 31.7 million tons.

If lower production wasn't bad enough, Argentine farmers received more bad news on the economic front. There are rumors in Argentina that the federal government may pause their program of lowering the soybean export tax by 0.5% per month. On January 1, 2018 the export tax on soybeans was 30% and by May it had been lowered to 27.5% and it was scheduled to decline every month until the end of 2019.

Even more upsetting for farmers are rumors that the Argentine government may reinstate a 10% export tax on corn and wheat. The Minister of Agriculture has stated that he did not believe that either of these proposals will come to fruition.

Farmers in Argentina increased their corn acreage in response to the elimination of the export tax on corn two years ago. If the export taxes on corn and wheat are reinstated, farmers may switch some of their corn acreage back to soybeans and wheat acreage to barley.