Porto Alegre, February 22, 2023 – The game of information about Argentina persists, as it happens with the Rio Grande do Sul crop of corn. Not only do the agribusiness media and trading companies make an effort to point to losses, but also investment funds that are very net long on the Chicago Board of Trade continue to inhibit any seasonal variation of crop arrival in Brazil. This quite helps Brazilian growers at this time of harvest. The market even ignores the flow of soybean sales from Brazil and Paraguay to meet the immediate demand from Argentina. The risk of this scenario is that funds may leave their too net long positions for more aggressive selling situations and dismantle bearish versions of the production numbers. At this moment, would better production estimates appear in Argentina?
The Argentine crop continues its fight against the weather, trying to show some consistent production size to the market. The corn harvest is starting from Santa Fe upward, while crops are getting into vegetative development, pollination and silking in Buenos Aires and Córdoba. Soybeans, from replanted and developing crops to blossoming and pod-setting stages.
This February, the rains returned in all producing regions of Argentina. The Argentine government updated the planted area estimate last week with 10.4 mln ha for corn, with silage, against market data of 7.1 mln ha without silage. For soybeans, 16.3 mln ha, in line with the market. The production data will only be estimated by the government in April. At this point, it is worth waiting for the climate profile in the next four weeks in these critical crop phases for a more consistent assessment of the reality of production. For now, 42/47 mln tons is a possible range for corn, and 38/42 mln for soybeans.
In the case of soybeans, as we explained in our previous newsletter, Paraguay and Brazil will supply Argentina with 6/8 mln tons, neutralizing most of the problems of the local industry. In the case of corn, export registrations were limited to 20 mln tons for the 2023 season. The government will certainly only raise this limit or not from July, when it has a better condition to assess the final result of the crop and its surpluses.
At this point, the smaller volume of corn to be offered by Argentina in the international market tends to carry more export demand first to the United States and then to Brazil in the second half of the year. The United States is practically alone in the case of significant corn sales until July, also because with the delayed planting of the Brazilian second crop, large shipments will only take place from August.
Thus, much of the “Argentina” effect on international prices seems to be absorbed, and the downward movement in soybeans and some support in corn must become clearer from now on. This week, the USDA Forum will take place, where the Baseline with ten-year projections is traditionally released. Always useful and contributing to a longer-term vision. However, we cannot use these data for 2023 due to the adequacy of the data produced in December with the reality of plantations in March.
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