Argentine soybeans, the green gold that looks pushed by the war in Ukraine

The good Argentine harvest of soybeans and cereals this year is a breath of optimism in the face of the world shortage of grains brought about by the war in Ukraine and also an injection of "agrodollars" for the battered economy of the South American country.

In May the harvest enters its most feverish stage. In Lobos, 100 km southwest of Buenos Aires, harvesters work from dawn to dusk to "lift" soybean before the austral autumn rains arrive.

"The prospects for the producer are good, international prices too. there is enthusiasm" Martín Semino, who sells agricultural machinery services and chairs the Rural Society of Lobos, a fertile agricultural area where corn is also grown, told AFP.

Argentina is one of the largest global agricultural producers and a leader in exports of soybean oil and meal. The oilseed is its flagship product since the transgenic variant was developed in the mid-1990s.

In the last 40 years, its production has multiplied 14 times, reaching a record 61 million tons in the 2014-2015 campaign. In the first decade of the 2000s, in the midst of the commodity boom, it helped Argentina recover from the serious crisis it suffered in 2001.

The omnipresence of this "green gold" it is total. "Soy is the dollar, the currency of the countryside"Semino noted. The services and the lease of the land are agreed in quintals of soy that is stored in huge silobags in the open field as if they were gigantic piggy banks.

The other face

For this agricultural cycle, almost 39 million hectares were planted -16 million with soybeans- and a production of about 127 million tons is expected, almost 2% less than the previous one due to the weather, but to more than compensate thanks to prices in its maximum level.

Argentina has already harvested wheat and sunflower -both with production records-, is in full harvest of soybeans and corn and will start the new wheat planting in mid-May.

It is estimated that in 2022, agro-industrial exports will reach a record 41,000 million dollars, some 3,000 million more than in 2021.

But faced with an auspicious international market "the only problem is that because of the war the prices of supplies skyrocketed"Semin said.

After overcoming a drought that reduced yields, the farm is facing soaring fertilizer prices, a shortage of diesel in the local market and, as a backdrop, inflation that is projected at more than 60% this year.

The rise in the price of crude oil due to the war encouraged Argentine oil exports and the refineries reduced the availability of diesel, causing a bottleneck at the peak of the harvest.

"A harvester needs between 600 and 1,000 liters per day and we barely have enough for trucks"says Semino, explaining that many buy the fuel on a black market.

Argentina imports 60% of the fertilizers it consumes and 15% comes from Russia.

"Nothing should be planted without adding fertilizers, but prices are through the roof"he remarked.

Soybeans require little fertilizer. To replenish the soil’s nutrients, its cultivation should be alternated with cereals, such as wheat or corn.

But with the high price of fertilizers "the agronomically necessary rotation is truncated because they do not give the numbers"Semino noted.

Sunflower Opportunity

The context may be an opportunity for an Argentine advance in the sunflower oil market, led by Russia and Ukraine.

The cost equation is good because it requires little fertilization and pays 7% in export taxes compared to 33% for soybean oil.

After a record harvest (3.4 million tons), the area planted with sunflowers is projected at 2 million hectares, an increase of 17% compared to the previous cycle.

"With prices near record highs, Argentina must seize the moment"Tomás Rodríguez Zurro, an economic analyst at the Rosario Cereals Exchange, told AFP.

The price rise "it is temporary and will end when the war is over"he considered, although its effects in Argentina will go further.

The fertilization deficit "will cause a decrease in yields and a reduction in the area planted with wheat after the record production of 22.1 million tons and will encourage the planting of soybeans"estimated.

In this campaign, soybean production would fall 10% affected by the high temperatures in January and would reach 41 million tons, although in value it will set a record.

The soybean complex will export 23,745 million dollars in 2022, about 700 million dollars more than in 2021, the expert pointed out.

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