Climate Turns in Argentina's Favor as New Soybean Crop Is Planted

18 October 2018

As soybean harvests wrap up in the United States over the next few weeks, growers in Argentina are just beginning this month to put seeds in the ground. A devastating drought last year slashed soybean production in the southern-hemisphere country by an estimated 30 percent for 2017/18. This year, Argentina’s growing conditions appear to be much more favorable, raising expectations of a rebound when a new crop of soybeans is harvested in 2019.

Measures of evapotranspiration in Argentina’s two provinces where soybeans are currently being planted, Buenos Aires and Santa Fe, suggest that drought conditions are long gone. For the provinces of Córdoba and Entre Rios, where soybean planting typically begins in January, conditions can still change. And of course it’s too early to predict overall yields for Argentine soybeans in 2018/19. But as the season continues, Gro Intelligence subscribers can track the crop’s progress with Gro’s Argentine Soybean Yield Model, which is updated daily. The Yield Model takes into account a host of factors, from geospatial data on vegetative health to how much land is brought into production. Meanwhile, how much of Argentina’s soybean crop eventually ends up on global markets will reflect decisions by Argentine farmers weighing issues such as the country’s high export tariffs and a long-depreciating domestic currency.

Read more:

Seasonal Production Cycles
Factors Influencing Argentine Production
Argentine Soybean Inventories
Export Taxes
Gro Yield Model Performance
Conclusion

Seasonal Production Cycles

The United States produces 38 percent of the world’s soybean crop. Farmers there begin planting soybeans between late April and June, and the harvest starts in September, going through mid-November. Soybean production in Argentina, which accounts for 19 percent of world output, occurs in two phases. A first crop is planted beginning in October and lasting through the end of December. Second crop soybean plantings start in January and continue through the end of February while harvest begins in late April and ends in June. Overall, USDA forecasts production of Argentina soybeans of 57.5 million tonnes in 2018/19, up from 40 million tonnes in 2017/18.

Argentina’s soybean-production cycle occurs in two phases. The first crop is planted in October and harvested as late as May. Second-crop soybeans go in the ground in January and are harvested in June.

Factors Influencing Argentine Production

Last year, Argentina’s drought knocked the Gro Yield Model projections across all four soybean-producing provinces from between 2.86-3.1 tonnes per hectare to 2.28-2.54 tonnes per hectare at harvest. Overall, the national average in 2017/18 was 26 percent lower than the previous year. The Grain Exchange of Buenos Aires estimated the total loss at $3.4 billion, representing a 0.5 percent hit to Argentina’s GDP.

Gro’s Soybean Yield model predicts final yield of Argentine soybeans. The chart above shows those predictions for the four largest soybean-producing provinces—Buenos Aires, Santa Fe, Córdoba, and Entre Rios—as yields succumbed to drought conditions in 2017/18.
 

Looking forward to 2018/19, evapotranspiration, which measures moisture lost through evaporation from soil and transpiration from plants, can give an indication of crop conditions at the time of planting and over the next few weeks. This month, evapotranspiration anomalies, or how far evapotranspiration has deviated from a historical norm, for Buenos Aires and Santa Fe were 105 and 91.1 percent, respectively. This indicates good planting conditions, at least for the first crop currently going in the ground.

The chart above shows evapotranspiration anomalies for the four largest soybean-producing provinces in Argentina. In Buenos Aires and Santa Fe provinces, where soybeans are currently being planted, current evapotranspiration anomalies are indicating favorable planting conditions.
 

Another indication of soybean grower confidence is area devoted to soybeans in soybean growing provinces. Farmers typically max out soybean acreage in first-crop provinces Buenos Aires and Santa Fe. But in Entre Rios and Córdoba provinces, where planting begins in January, farmers can sometimes choose to grow other crops—corn and wheat—instead of soybeans. The more land that is devoted to soybeans in these provinces, the lower the overall yield at the end of the season. That is because as soybean acreage expands, more and more marginal lands prone to suboptimal yields are used.

A heat map of evapotranspiration anomalies for Argentina’s four main soybean-producing provinces—Buenos Aires and Santa Fe, which produce a first soybean crop, and Córdoba and Entre Rios, where a second crop is grown. Green color indicates a higher level of moisture.
 

Sixty percent of Argentina’s crop area is covered with soybeans, and the USDA projects that production area devoted to soybeans will increase for the 2018/19 market year by 3 percent over the previous year, with expansion coming especially during the second crop starting in the winter. Another factor: The glyphosate/seed ratio is expected to fall to 0.95, 14 percent below average, lowering cost of production and signalling a possible boost in second-crop soybean acreage in 2018/19. Overall yields are expected to return to normal to about 3 tonnes per hectare in 2018/19, compared with 2.32 tonnes per hectare in 2017/18.

Argentine Soybean Inventories

Most Argentine farmers tend to sell their corn and wheat crop soon after harvest to recoup production and financing costs. Soybean farmers, however, tend to hold onto volumes longer, using stored beans as a source of liquidity protecting against periods of political uncertainty, high export taxes, and exchange volatility. While Argentina is thought to have a total storage capacity of 52 million tonnes, precise estimates of ending stocks in Argentina are hard to come by. Because of the poor weather conditions in 2017/2018 that reduced yields, the USDA placed ending stocks at 32 million tonnes. For 2018/19, the USDA projects soybean ending stocks to rise to about 36.3 million tonnes. To hedge against lost revenue, Argentine farmers have generally been holding onto more of their soybean stocks in recent years as the peso has severely depreciated and political uncertainty has continued. Stock volumes help to determine how much product is free for export and/or domestic uses.

Soybean ending stocks help to determine how much product is free for export. In Argentina, ending stocks have been on a mostly rising trend in recent years.

Export Taxes

In 2015, President Mauricio Macri was swept into office, promising, among other changes, to reform Argentina’s agricultural policy through the elimination of export taxes. Several export-tax reductions were introduced since then, but, in a policy reversal announced on Sept. 3, he and Economy Minister Nicolas Dujovne said soybean export taxes in effect will no longer be eliminated as the country attempts to reduce its gaping fiscal deficit, for which it has sought help from the International Monetary Fund.

Under the new plan, Argentina will cut export taxes on soybeans and soybean oil from 25.5 percent and 23 percent, respectively. But it will also impose a 4-peso retention fee per US dollar of export income, essentially nullifying the export-tax reductions.

The Argentine peso has been hit hard by the country’s deteriorating fiscal situation. In October 2013, one US dollar was worth 5.88 pesos. Today, a dollar equals 36.64 pesos. Depreciation of a country’s domestic currency typically puts positive pressure on exports. In the case of agricultural commodities, the gap between the cost of domestic farm inputs and the expected export revenues widens, ,incentivizing farmers to devote greater volumes for export markets.

The Argentine peso has dropped sharply against the US dollar over the past decade, as the country attempts to manage its gaping fiscal deficit.

Gro Yield Model Performance

The Gro Argentine Soybean Yield Model forecasts final yield for 464 relevant Argentine subprovincial political units. With online maps of normalized difference vegetation index, or NDVI, values in early 2018, Gro subscribers were able to see large drought- stricken areas spanning the three largest soybean producing provinces of Buenos Aires, Córdoba, and Santa Fe. NDVI, a measure of vegetative health, also caused our model to predict final yields well below the generally accepted numbers. Then, as reports of extreme dryness trickled in during the season, the authorities progressively lowered their yield estimates, narrowing the gap with the Gro model. At every monthly report, Gro’s yield model remained below the consensus, helping traders to be consistently long through a profitably bullish period.

Performance of a yield model can be assessed in several ways. Looking at financial trading results is one way. For example, the WASDE report, from the US Department of Agriculture, was published four times over the course of Argentina’s 2017/18 crop cycle—12 January, 8 February, 8 March, and 10 April. At each date, a one-day trade at the close would have made 10.50, 4.75, -1.25, and 3.00 cents per bushel, respectively, for a total of 17 cents/bushel over four days of trading.

As farmers plant the 2018/19 crop, we look forward to another successful year for the Gro Yield Model. Subscribers will begin receiving daily updates in January of 2019.

In 2017/18, the Gro Intelligence Argentine Soy Yield Forecast Model consistently projected a lower yield than did the USDA WASDE reports. USDA projections eventually declined to mirror those of Gro.

Conclusion

While the Argentine Gro Yield Model projections for 2018/19 are not published yet, we expect even better performance this year. As soybean planting across Argentina continues to ramp up, it is unclear how well yields and production will bounce back from the droughts experienced last year. But as the machine- learning algorithm incorporates crop-production patterns with every passing season, our models will become increasingly more accurate. Whether you’re a financial trader or a physical trader, Gro provides value for subscribers participating in all aspects of commodity markets.

Global agriculture data at your fingertips

Want to learn more?

Request a demo

Receive our research in your inbox

Submit

Thank you for subscribing to our newsletter!

Contact sales
Gro Intelligence Privacy Policy

This Privacy Policy describes the policies and procedures of Gro Intelligence, Inc. (“we”, “our” or “us”) on the collection, use and disclosure of your information on www.gro-intelligence.com (the “Site”) and the services, features, content or applications we offer (collectively with the Site, the “Services”). We receive information about you from your use of the Services generally. When you use the Services, you are consenting to the collection, transfer, manipulation, storage, disclosure and other uses of your information as described in this Privacy Policy.

What Does This Privacy Policy Cover?

This Privacy Policy covers the treatment of personally identifiable information (“Personal Information”) gathered when you are using or accessing the Services. This Privacy Policy also covers our treatment of any Personal Information that our business partners share with us or that we share with our business partners.

This Privacy Policy does not apply to the practices of third parties that we do not own or control, including but not limited to any third party websites, services and applications (“Third Party Services”) that you elect to access through the Service or to individuals that we do not manage or employ. While we attempt to facilitate access only to those Third Party Services that share our respect for your privacy, we cannot take responsibility for the content or privacy policies of those Third Party Services. We encourage you to carefully review the privacy policies of any Third Party Services you access.

What Information Do We Collect?

The information we gather enables us to personalize, improve and continue to operate the Services. We collect the following types of information from our users.

IP Address Information and Other Information Collected Automatically:

· We automatically receive and record information from your web browser when you interact with the Services, including your IP address and cookie information. This information is used for fighting spam/malware and also to facilitate collection of data concerning your interaction with the Services (e.g., what links you have clicked on).

· Generally, the Services automatically collect usage information, such as the number and frequency of visitors to the Site. We may use this data in aggregate form, that is, as a statistical measure, but not in a manner that would identify you personally. This type of aggregate data enables us and third parties authorized by us to figure out how often individuals use parts of the Services so that we can analyze and improve them.

Information Collected Using Cookies:

· Cookies are pieces of text that may be provided to your computer through your web browser when you access a website. Your browser stores cookies in a manner associated with each website you visit. We use cookies to enable our servers to recognize your web browser and tell us how and when you visit the Site and otherwise use the Services through the Internet.

· Our cookies do not, by themselves, contain Personal Information, and we do not combine the general information collected through cookies with other Personal Information to tell us who you are. As noted, however, we do use cookies to identify that your web browser has accessed aspects of the Services.

· Most browsers have an option for turning off the cookie feature, which will prevent your browser from accepting new cookies, as well as (depending on the sophistication of your browser software) allowing you to decide on acceptance of each new cookie in a variety of ways.

· This Privacy Policy covers our use of cookies only and does not cover the use of cookies by third parties. We do not control when or how third parties place cookies on your computer. For example, third party websites to which a link points may set cookies on your computer.

Aggregate Information:

We collect statistical information about how users collectively use the Services (“Aggregate Information”). Some of this information may be derived from Personal Information. This statistical information is not Personal Information and cannot be tied back to you or your web browser.

How, and With Whom, Is My Information Shared?

IP Address Information:

While we collect and store IP address information, that information is not made public. We do at times, however, share this information with our partners, service providers and other persons with whom we conduct business, and as otherwise specified in this Privacy Policy.

Information You Elect to Share:

You may access other Third Party Services through the Services, for example by clicking on links to those Third Party Services from within the Site. We are not responsible for the privacy policies and/or practices of these Third Party Services, and you are responsible for reading and understanding those Third Party Services’ privacy policies. This Privacy Policy only governs information collected on the Services.

Aggregate Information:

We share Aggregate Information with our partners, service providers and other persons with whom we conduct business. We share this type of statistical data so that our partners can understand how and how often people use our Services and their services or websites, which facilitates improving both their services and how our Services interface with them. In addition, these third parties may share with us non-private, aggregated or otherwise non Personal Information about you that they have independently developed or acquired.

Information Shared with Our Agents:

We employ and contract with people and other entities that perform certain tasks on our behalf and who are under our control (our “Agents”). We may need to share Personal Information with our Agents in order to provide products or services to you. Unless we tell you differently, our Agents do not have any right to use Personal Information or other information we share with them beyond what is necessary to assist us. You hereby consent to our sharing of Personal Information with our Agents.

Information Disclosed Pursuant to Business Transfers:

In some cases, we may choose to buy or sell assets. In these types of transactions, user information is typically one of the transferred business assets. Moreover, if we, or substantially all of our assets, were acquired, or if we go out of business or enter bankruptcy, user information would be one of the assets that is transferred or acquired by a third party. You acknowledge that such transfers may occur, and that any acquirer of us or our assets may continue to use your Personal Information as set forth in this policy.

Information Disclosed for Our Protection and the Protection of Others:

We also reserve the right to access, read, preserve, and disclose any information as we reasonably believe is necessary to (i) satisfy any applicable law, regulation, legal process or governmental request, (ii) enforce this Privacy Policy and our Terms of Service, including investigation of potential violations hereof, (iii) detect, prevent, or otherwise address fraud, security or technical issues, (iv) respond to user support requests, or (v) protect our rights, property or safety, our users and the public. This includes exchanging information with other companies and organizations for fraud protection and spam/malware prevention.

Information We Share With Your Consent:

Except as set forth above, you will be notified when your Personal Information may be shared with third parties, and will be able to prevent the sharing of this information.

Is Information About Me Secure?

We store all of our information, including your IP address information, using industry-standard techniques. We do not guarantee or warrant that such techniques will prevent unauthorized access to information about you that we store, Personal Information or otherwise.

What Information of Mine Can I Access?

You can access and delete cookies through your web browser settings.

California Privacy Rights: Under California Civil Code sections 1798.83-1798.84, California residents are entitled to ask us for a notice identifying the categories of personal customer information which we share with our affiliates and/or third parties for marketing purposes, and providing contact information for such affiliates and/or third parties. If you are a California resident and would like a copy of this notice, please submit a written request to the following address: 12 E 49th Street, 11th Floor, New York, NY 10017

What Happens When There Are Changes to this Privacy Policy?

We may amend this Privacy Policy from time to time. Use of information we collect now is subject to the Privacy Policy in effect at the time such information is used. If we make changes in the way we collect or use information, we will notify you by posting an announcement on the Services or sending you an email. A user is bound by any changes to the Privacy Policy when he or she uses the Services after such changes have been first posted.

What If I Have Questions or Concerns?

If you have any questions or concerns regarding privacy using the Services, please send us a detailed message to support@gro-intelligence.com. We will make every effort to resolve your concerns.

Effective Date: March 11, 2014

 

Gro Intelligence Terms of Service

Please read these Terms of Service (collectively with Gro Intelligence’s Privacy Policy, the “Terms of Service”) fully and carefully before using www.gro-intelligence.com (the “Site”) and the services, features, content or applications offered by Gro Intelligence, Inc. (“we”, “us” or “our”) (together with the Site, the “Services”). These Terms of Service set forth the legally binding terms and conditions for your use of the Site and the Services.

1. Acceptance of Terms of Service.

a. By using the Services in any manner, including but not limited to visiting or browsing the Site, you agree to these Terms of Service and all other operating rules, policies and procedures that may be published from time to time on the Site by us, each of which is incorporated by reference and each of which may be updated from time to time without notice to you.

2. Content.

a. Definition. For purposes of these Terms of Service, the term “Content” includes, without limitation, information, data, text, photographs, videos, audio clips, written posts and comments, software, scripts, graphics, and interactive features generated, provided, or otherwise made available on or through the Services.

b. Notices and Restrictions. The Services may contain Content specifically provided by us or our partners and such Content is protected by copyrights, trademarks, service marks, patents, trade secrets or other proprietary rights and laws. You shall abide by and maintain all copyright notices, information, and restrictions contained in any Content accessed through the Services. Unless otherwise indicated, these Terms of Service and all Content provided by us are copyright © 2018 Gro Intelligence, Inc. All rights reserved.

c. Use License. Subject to these Terms of Service, we grant each user of the Services a worldwide, non-exclusive, non-sublicensable and non-transferable license to use (i.e., to download and display locally) Content solely for purposes of using the Services. Use, reproduction, modification, distribution or storage of any Content for other than purposes of using the Services is expressly prohibited without prior written permission from us. You shall not sell, license, rent, or otherwise use or exploit any Content for commercial use or in any way that violates any third party right.

d. Availability of Content. We do not guarantee that any Content will be made available on the Site or through the Services. We reserve the right to, but do not have any obligation to, (i) remove, edit or modify any Content in our sole discretion, at any time, without notice to you and for any reason (including, but not limited to, upon receipt of claims or allegations from third parties or authorities relating to such Content or if we are concerned that you may have violated these Terms of Service), or for no reason at all and (ii) to remove or block any Content from the Services.

3. Rules of Conduct.

a. As a condition of use, you represent, warrant and covenant not to use the Services for any purpose that is prohibited by these Terms of Service or applicable laws, rules and regulations applicable to you. You are responsible for all of your activity in connection with the Services.

b. You shall not (directly or indirectly):

i. take any action that imposes or may impose (as determined by us in our sole discretion) an unreasonable or disproportionately large load on our (or our third party providers’) infrastructure;

ii. interfere or attempt to interfere with the proper working of the Services or any activities conducted on the Services;

iii. bypass, circumvent or attempt to bypass or circumvent any measures we may use to prevent or restrict access to the Services (or other accounts, computer systems or networks connected to the Services);

iv. use manual or automated software, devices, or other processes to “crawl” or “spider” any page of the Site;

v. harvest or scrape any Content from the Services;

vi. otherwise take any action in violation of our guidelines and policies;

vii. decipher, decompile, disassemble, reverse engineer or otherwise attempt to derive any source code or underlying ideas or algorithms of any part of the Services (including without limitation any application), except to the limited extent applicable laws specifically prohibit such restriction;

viii. modify, translate, or otherwise create derivative works of any part of the Services; or

ix. copy, rent, lease, distribute, or otherwise transfer any of the rights that you receive hereunder.

c. We also reserve the right to access, read, preserve, and disclose any information as we reasonably believe is necessary to:

i. satisfy any applicable law, regulation, legal process or governmental request;

ii. enforce these Terms of Service, including investigation of potential violations hereof;

iii. detect, prevent, or otherwise address fraud, security or technical issues;

iv. respond to user support requests; or

v. protect the rights, property or safety of us, our users and the public.

4. Third Party Services. The Services may permit you to link to other websites, services or resources on the Internet, and other websites, services or resources may contain links to the Services. When you access third party resources on the Internet, you do so at your own risk. These other resources are not under our control, and you acknowledge that we are not responsible or liable for the content, functions, accuracy, legality, appropriateness or any other aspect of such websites or resources. The inclusion of any such link does not imply our endorsement or any association between us and their operators. You further acknowledge and agree that we shall not be responsible or liable, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any such content, goods or services available on or through any such website or resource.

5. Termination. We may terminate your access to all or any part of the Services at any time, with or without cause, with or without notice, effective immediately. All provisions of these Terms of Service which by their nature should survive termination shall survive termination, including, without limitation, ownership provisions, warranty disclaimers, indemnity and limitations of liability.

6. Warranty Disclaimer.

a. You release us from all liability for you having acquired or not acquired Content through the Services. We make no representations concerning any Content contained in or accessed through the Services, and we will not be responsible or liable for the accuracy, copyright compliance, or legality of material or Content contained in or accessed through the Services.

b. THE SERVICES AND CONTENT ARE PROVIDED “AS IS”, “AS AVAILABLE” AND WITHOUT WARRANTY OF ANY KIND, EXPRESS OR IMPLIED, INCLUDING, BUT NOT LIMITED TO, THE IMPLIED WARRANTIES OF TITLE, NON-INFRINGEMENT, MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE, AND ANY WARRANTIES IMPLIED BY ANY COURSE OF PERFORMANCE OR USAGE OF TRADE, ALL OF WHICH ARE EXPRESSLY DISCLAIMED. WE, AND OUR DIRECTORS, EMPLOYEES, AGENTS, SUPPLIERS, PARTNERS AND CONTENT PROVIDERS DO NOT WARRANT THAT: (I) THE SERVICES WILL BE SECURE OR AVAILABLE AT ANY PARTICULAR TIME OR LOCATION; (II) ANY DEFECTS OR ERRORS WILL BE CORRECTED; (III) ANY CONTENT AVAILABLE AT OR THROUGH THE SERVICES IS FREE OF VIRUSES OR OTHER HARMFUL COMPONENTS; OR (IV) THE RESULTS OF USING THE SERVICES WILL MEET YOUR REQUIREMENTS.

7. Limitation of Liability. IN NO EVENT SHALL WE, NOR OUR DIRECTORS, EMPLOYEES, AGENTS, PARTNERS, SUPPLIERS OR CONTENT PROVIDERS, BE LIABLE UNDER CONTRACT, TORT, STRICT LIABILITY, NEGLIGENCE OR ANY OTHER LEGAL OR EQUITABLE THEORY WITH RESPECT TO THE SERVICES FOR ANY (I) LOST PROFITS, DATA LOSS, COST OF PROCUREMENT OF SUBSTITUTE GOODS OR SERVICES, OR SPECIAL, INDIRECT, INCIDENTAL, PUNITIVE, COMPENSATORY OR CONSEQUENTIAL DAMAGES OF ANY KIND WHATSOEVER, SUBSTITUTE GOODS OR SERVICES (HOWEVER ARISING), (II) BUGS, VIRUSES, TROJAN HORSES, OR THE LIKE (REGARDLESS OF THE SOURCE OF ORIGINATION), OR (III) DIRECT DAMAGES IN EXCESS OF $50.00.

8. Governing Law and Jurisdiction. These Terms of Service shall be governed by and construed in accordance with the laws of the State of New York, including its conflicts of law rules, and the United States of America. You agree that any dispute arising from or relating to the subject matter of these Terms of Service shall be governed by the exclusive jurisdiction and venue of the state and Federal courts of New York County, New York.

9. Miscellaneous.

a. Modification. We reserve the right, in our sole discretion, to modify or replace any of these Terms of Service, or change, suspend, or discontinue the Services at any time. Your continued use of the Services following notification of any changes to these Terms of Service constitutes acceptance of those changes.

b. Entire Agreement and Severability. These Terms of Service are the entire agreement between you and us with respect to the Services, including use of the Site, and supersede all prior or contemporaneous communications and proposals (whether oral, written or electronic) between you and us with respect to the Services. If any provision of these Terms of Service is found to be unenforceable or invalid, that provision will be limited or eliminated to the minimum extent necessary so that these Terms of Service will otherwise remain in full force and effect and enforceable. The failure of either party to exercise in any respect any right provided for herein shall not be deemed a waiver of any further rights hereunder

c. Force Majeure. We shall not be liable for any failure to perform our obligations hereunder where such failure results from any cause beyond our reasonable control, including, without limitation, mechanical, electronic or communications failure or degradation.

d. Assignment. These Terms of Service are personal to you, and are not assignable, transferable or sublicensable by you except with our prior written consent. We may assign, transfer or delegate any of our rights and obligations hereunder without consent.

e. Agency. No agency, partnership, joint venture, or employment relationship is created as a result of these Terms of Service and neither party has any authority of any kind to bind the other in any respect.

f. Notices. Unless otherwise specified in these Term of Service, all notices under these Terms of Service will be in writing and will be deemed to have been duly given when received, if personally delivered or sent by certified or registered mail, return receipt requested; when receipt is electronically confirmed, if transmitted by facsimile or e-mail; or the day after it is sent, if sent for next day delivery by recognized overnight delivery service. Electronic notices should be sent to support@gro-intelligence.com

g. No Waiver. Our failure to enforce any part of these Terms of Service shall not constitute a waiver of our right to later enforce that or any other part of these Terms of Service. Waiver of compliance in any particular instance does not mean that we will waive compliance in the future. In order for any waiver of compliance with these Terms of Service to be binding, we must provide you with written notice of such waiver through one of our authorized representatives.

h. Headings. The section and paragraph headings in these Terms of Service are for convenience only and shall not affect their interpretation.

Contact. You may contact us at the following address: 12 E 49th Street, 11th Floor, New York, NY 10017.