Inputs, climate and official intervention: the factors that drive soybeans to regain ground

The soybean planting intention, which projected a fall of between 5% and 7%, could recover at least 1% due to the risks of more official intervention in the corn market, the climatic outlook and the greater advantage compared to the impact than the cost of inputs is having on the margins, as analyzed by the consulting firm Lorena D’Angelo in dialogue with TN.com.ar

In this sense, the specialist specified: “The drop expected in soybeans is due to the fact that, when planting decisions were being made, mainly for the purchase of inputs, it was the crop that in the core zone gave the most margin tight. Therefore, the producers were inclined towards the alternative of corn. But those who had not bought all the inputs in advance, due to the rise that occurred recently, are evaluating whether some hectares can be overturned by the oilseed. This is because the inputs have a much greater impact on the productive cost of the cereal ”.

In this regard, he pointed out that these products have been increasing since the beginning of the year, but the difference is that currently corn does not have the same valuation as then, so the impact on profitability of this factor is greater. “China’s export limitations and sustained international demand, along with the rises in oil and gas, caused the prices of fertilizers and agrochemicals to skyrocket. Added to this are the restrictions on imports from our country, which affect the purchase of these products. “

Likewise, D’Angelo exemplified some percentage increases in dollars that occurred in this variable. “So far this year, glyphosate has risen 140%, urea 60%, and diammonium phosphate 70%. On the other hand, the grains in the last months have been correcting their prices downwards “

Likewise, the Rosario Stock Exchange (BCR) announced at the end of September that the Urea, the fertilizer most used by corn producers, experienced a 24% increase in the last quarter. The value of the crop also grew, but much less: 8%. Thus, the input / output ratio went from 3.1 to 3.5.

However, the analyst recalled that this BCR report also showed that in the core region, margins were still higher for corn. “But in other places, soybeans could gain a few hectares due to this factor. In addition, price expectations would be firmer for soybeans, which is contagious almost exclusively from what happens internationally. Different are the cases of corn and wheat, which have extra risks in Argentina, like that at any moment exports can be closed when the quotas are reached ”, he added.

The input-output ratio rises in corn, so soybeans become more attractive.  (Source: BCR)
The input-output ratio rises in corn, so soybeans become more attractive. (Source: BCR)

This survey of the Santa Fe entity, in line with what D’Angelo stated, also emphasized the lack of many fertilizers and phytosanitary products. “Lack of urea, we do not know if it is something temporary or not. Too glyphosate is missing, we think it may be due to production problems in China, “said the aforementioned producers.

Regarding this, the specialist pointed out: “Beyond the report that the USDA (US Department of Agriculture) released on Tuesday, which was bearish and will continue to hit the market because there will be more production from the United StatesIt does not mean that it impacts in the same way in Argentina. Because there is little soy to be commercialized for the 2020/21 cycle and the area will decrease in the next sowing. So that makes local prices more sustainable than at the international level, above all, due to the uncertainty that there is productively due to La Niña, which generally causes lower yields in South America ”.

Precisely, he also mentioned the climatic factor as one of the factors that plays in favor of the oilseed recovery. “In some regions humidity is lacking. So that forces to delay the sowing of early corn, which is the optimal date, which causes them to turn to soybeans ”.

In this regard, D’Angelo indicated: “The Niña year leaves less rainfall at the time of early sowing, either in first-class soybeans or corn. That made the producers, who were inclined towards the cereal, implanted it late. But how the profitability equation was better in wheat-soybeans when they started sowing, that made there a significant increase in second-rate oilseed, which has a lower yield than the first class and that is why there will be a decrease in production ”.

Finally, although he commented that a decline in the territory of soy is certain, the expert concluded: “What happens at the time of sowing, It will depend a lot on what happens with the weather and how the prices follow, especially with these latest measures on corn, since it is intervened. Too influences whether inputs have already been purchased or not, like the places of production, since in some the cereal continues to have the best margin ”, said the specialist, reviewing the general panorama.

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