Argentina soy crop to fall “below 40 million mt”: Rabobank

Dutch bank Rabobank has cut its forecast for Argentina’s 2018/19 soybean crop to 40 million, “as hot and dry weather continues to hurt the crop”, a fall of 18 million mt on the year, with the bank warning of a further decline in the crop.

“We are suggesting below 40 million mt (in our latest report) as there is more potential for it to fall further,” commodity analyst Charles Clack said on the phone to AgriCensus.

Argentina's crop size is set to be the lowest in six years, which will force the Argentinian crush rates down on the year, with the country’s soymeal exports potential the lowest level since 2014/15, the bank said.

The last time Argentina’s soymeal exports fell year-on-year was during the 2012 drought when the fall was offset by a strong rise in Brazil and US soybean export numbers, and higher crush activity in import countries such as Asia and the EU.

“We expect a similar market reaction this year,” the bank said.

Rabobank currently pegs the Brazil crop at 114 million mt.

Over in the US, the bank expects a record for planted acreage of 91 million acres, up 1% on last year.

Corn

Corn yields in South America remain of key concern, with the Argentinian crop forecast falling to 9.5% on the month to 33 million mt on continued drought with little room for the crop to rebound as “the damage is done,” the bank said.

Corn plantings in Brazil are “heavily delayed” and lag 4% to last year as the soy harvest is taking longer, increasing the risk of exposure to frosts which may stunt yields.

Current pricing favours soybean plantings in the US over corn, with a fall of 0.7 million acres to 89.5 million acres of corn as a result, which will be buffered by sufficient US stock levels.

Wheat

The bank maintains its expected US acreage at 47 million acres, up 1.3 million acres from last year with both spring and winter plantings up, but expects the US balance sheet to tighten for a second year with US stocks estimated at 810 million bu.

Rabobank forecasts CBOT wheat at $4.80/bu by Q4 and Matif at €170/mt.

Over in the Black Sea Region, conditions have been favourable, with the recent cold weather “unlikely to have caused a sizeable damage”.

However, Russia’s wheat production is expected to come in at 73 million mt, down 11.5 million mt on the year, but exports from the region are expected to remain at the same pace next year as leftover stocks are exported.