The Argentina Agribusiness service provides proprietary medium term price forecasts for key commodities, including corn, wheat, rice, sugar, cocoa, coffee, soy and milk; in addition to newly-researched competitive intelligence on leading agribusiness producers, traders and suppliers; in-depth analysis of latest industry developments; and essential industry context on Argentina’s agribusiness service.
Argentine grain and soybean production is estimated to rebound significantly in 2009/10 following the country’s worst drought in years in the 2008/09 season. The increase in grain and soybean output should help the country control its food price inflation problems and help the country’s famous, albeit embattled, beef sector to increase output. Over the short term, we forecast production gains across the grains and livestock segments. However, the acrimonious relationship between the Argentine government and its farmers poses a significant downside production risk.
From 2010, under the government’s biofuel law, all gasoline sold in Argentina must contain at least 5% ethanol. In February 2010, service stations in the capital Buenos Aires began selling the 5% ethanol blend. YPF, Shell and Petrobras are already selling the blend in stations in north-west Argentina. The new law will cause domestic production of ethanol increase and we expect millers to invest in ethanol production in the coming years. ProsperAr, Argentina’s national investment development agency, anticipates that the biofuel law will create annual captive demand for about 243,000m3 of bioethanol. Argentine beef has always enjoyed a reputation as some of the best in the world. Cattle roam vast grasslands and consumers benefit from the superior taste and texture that this semi-wild rearing gives the meat. However, there is significant government interference in the sector. In another attempt to control soaring food price inflation, the government banned beef exports in July 2010. The ban highlights our poor 2009/10 beef production outlook, which combined with high domestic consumption rates has led to a tightened local market. The government’s move also highlights the poor relationship between it and Argentina’s farmers, many of which have sent fewer animals to market in order to raise prices.
Argentina is the world’s third largest soybean producer, behind the US and Brazil, and is the biggest exporter of the crop. In 2010/11, we expect soybean production to decline slightly as the area harvested is forecast to fall to 18.5mn hectares. More area is being used for corn, the price of which is relatively high by the standards of recent quarters. Through to 2013/14, we expect strong worldwide demand for soybeans, especially from emerging markets, to ensure production growth remains strong and we forecast production to rise to nearly 68mn tonnes