Soy vs corn? Argentine farmers weigh high prices, dryness as planting season hits

By waiting to plant corn in November and December, Argentine farmers are betting they can benefit from an increase in showers expected toward the end of the year.

Erin Ehnle Brown / Grand Vale Creative LLC

BUENOS AIRES — High soy prices are expected to support planting in Argentina this season, but that will be balanced by dry weather, which is driving farmers across the Pampas grains belt to favor late-season corn, which also has attractive prices.

Argentina is the world's top exporter of soymeal livestock feed, used to fatten hogs and cattle from Europe to Southeast Asia. The grain, which is the country's main cash crop, competes with corn for planting area in Argentina late in the year. Corn planting starts in September, soy in October.

But by waiting to plant corn in November and December, farmers are betting they can benefit from an increase in showers expected toward the end of the year. Dryness has been an issue for Argentine wheat crops over recent months, prompting growers to be risk-averse as they make soy versus corn sowing decisions.

"Producers have changed their defensive strategy against the risk of drought and are diversifying crops instead of going directly to soybeans, as happened before," said Esteban Copati, lead analyst at the Buenos Aires Grains Exchange.

"This year there is strong intention toward late-season corn planting."


In Brazil, meanwhile, farmers are planning to ramp up soy planting sharply.

Global soy prices topped $10 this month for the first time in two years, driven by lower-than-expected soybean crushing in the United States, a potential boon for Argentine growers.

The Rosario grains exchange estimates 17.3 million hectares will be planted with soy in the 2020/21 season - only 100,000 hectares more than the previous crop year - with a projected harvest of 50 million tonnes.

"What happened is that corn, which competes with soy for planting area, is having a good season. This has limited the transition to soybeans," said Emilce Terre, chief economist at the Rosario exchange.

"Although we believe corn area will fall and that of soybeans will rise, the recent recovery in corn prices puts a brake, in principle, on the transfer of more area," she said.

In the local MatbaRofex futures market, an April 2021 reference contract for corn has risen some 33% since April, to $160 per tonne. The May 2021 reference contract for soybeans has risen around 14% since March to $254 per tonne.

Crop rotation benefits soils in Argentina after years of being dominated by soybeans. The Buenos Aires exchange will release its 2020-21 soybean planting projections next week. It forecasts 6.2 million hectares of 2020-21 corn.

"As September continues, a scenario of lack of rainfall will continue to dominate," said local meteorologist German Heinzenknecht, adding October should see more rainfall.


But the La Nina climate phenomenon, which typically brings dryness to Argentina, will be a concern for the rest of the year. "It will be a complicated season. The La Nina phenomenon is a negative one, even if it is not strong," Heinzenknecht said.

Growers themselves agreed weather will be the main problem.

"Prices should get better, plus China is buying everything," said Eduardo Bell, a grower in the town of Saladillo, Buenos Aires province. "Our biggest worry is La Nina."

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