What Producers Need to Know About Argentine Production
Nov 06, 2012
Argentine crop production continues to be in focus as excessive rains prompted analysts to make cuts in the yield and quality of the Argentine wheat crop (USDA currently estimating Argentine wheat crop at 11.5 million metric tons, many insiders thinking it is closer to 10.0 million metric tons, compared to 15.0 million metric tons produced last year). There have also been a wide array of numbers being thrown around that have been reducing the total production estimates for both corn and soybeans as well. Yes, the rain has been falling, but I am starting to hear more talk that producers are actually getting a much larger portion of their crops in the ground than what has been reported as of late. Obviously, many of the lower lying areas are still not seeing any activity, but I am starting to hear more and more reports about the planters rolling in areas that where previously in question. Bottom-line, the sun coming out over the last two weeks in northern Buenos Aires, Santa Fe, Entre Rios and Cordoba provinces has helped firm the topsoils enough to allow producers to get back to work and planting to slowly progress. Regardless of improving conditions in a few select areas I highly doubt we will see the Argentine producers reach the lofty USDA estimates of 55 million metric tons of soybeans and 28 million metric tons of corn. Keep in mind that last year Argentina only produced 41 million metric tons of soy and 21 million metric tons of corn. Something else we need to watch is the fact Standard & Poor's rating agency has just reduced Argentina's economic outlook to negative (B-). As we sit here today, there is no real significance, but if their economy or government starts to more rapidly deteriorate we could potentially see export flow from Argentina adversely effected. Moral of the story, I know it is early, but the worlds 3rd largest soybean exporter and 2nd largest corn exporter might not have the record year everyone had originally anticipated.
*Celeres estimating Brazil's soybean production will be around 79.02 million tons. This is currently below the USDA's most recent estimate of 81.0MMT's. Don't forget CONAB will throw their latest Brazilian estimates in the hat on Thursday, the trade will be eagerly awaiting those numbers.
ALSO don't forget, USDA's November crop report is scheduled to be released this Friday (Nov 9th) and will be the next major hurdle facing grain and soy traders. The consensus seems to be that US soybean production as well as the carry is heading higher. Corn seems to be somewhat mixed (with most thinking the yield could move a shade lower and stocks a shade higher). Traders seem to believe global wheat production could be moving lower. I will pass along more specifics estimates and guesses later this week as the report gets closer. Sign-up below for more in-depth coverage before and after Friday's report and what you as producers can do to minimize risk and capitalize on the market moves.
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