USDA/FAS GAIN Report AR 6016: Argentina - Oilseeds and products annual

Approved by: Bob Hoff, U.S. Embassy
Prepared by: Kari Rojas

Report Highlights

Soybean area and production are forecast to increase slightly in marketing year (MY) 2006/07 to 41.3 million metric tons (MMT) and 15.5 million hectares (MHAS) respectively. Peanut and sunflower production and area is forecast unchanged.

Executive Summary

Argentina oilseed production will continue to expand in the coming year but at a lesser rate than previous years. While there is still area available for expansion in the Northern provinces (Salta, Jujuy, Chaco, etc.), as oilseed prices stabilize, and land and input prices increase, the viability of putting these lands in production will be seriously scrutinized by potential investors.

Argentine producers are excellent farm managers and have turned to contract labor and onfarm storage alternatives to increase their efficiency. Instead of investing in harvesting and planting machinery, producers contract out these tasks and transportation to port, to reduce their operating costs. Silo bags are still very much in use in the country side, giving producers the ability to hold on to their production until prices are as high as possible.

Since Argentine oilseed production is heavily dependent on exports, the future of Argentine competitiveness in the world oilseed market will depend greatly on the exchange rate. Since the devaluation of 2001, Argentina’s exchange rate has remained near, or above, 3 pesos per dollar. At this rate Argentine exports are competitive but should the rate strengthen relative to the dollar, the Argentine agricultural sector could begin to feel pressure, similar to what is occurring to Brazilian producers, whose profits have declined significantly as the value of soybeans has fallen.

Full report in PDF format: http://www.fas.usda.gov/gainfiles/200605/146187634.pdf