Argentina Agribusiness Industry Update Quarter 4 2011

  • October 2014
  • -
  • Business Monitor International
  • -
  • 98 pages

BMI View: Even though the government is continuously intervening in the market (which can distort production incentives), Argentine agriculture output is one of the world's strongest, running a surplus in virtually all commodities. High prices have encouraged farmers to plant and they will continue to do so in the short term. Also, the country's currency has remained attractive, which has enabled exports to remain strong throughout the crisis. However, labour issues and workers strikes remain a concern for exporters. Another concern is the sluggish outlook of Argentina's livestock market, with the country's iconic beef consumption now falling and restrictions to exports in place. However, high cattle prices could finally encourage herd re-building at the latter end of our projection period.

Key Trends
Corn production growth to 2014/15: 33.7% to 31.1mn tonnes. This will come from increased area harvested as improved prices and export opportunities arising from increasing livestock and biofuel production encourage farmers to plant corn. In addition, farmers are increasingly rotating soybean crop with corn and wheat.
Beef consumption growth to 2015: 11.6% to 2.6mn tonnes. Slowing growth will be due to slight changes in diet as health concerns see consumers cutting down on the amount of beef they eat. Soybean production growth to 2014/15: 31.2% to 71.5mn tonnes. This is because area planted with soybean will continue to increase and new technology will be adopted, which should allow for better yields.
2011 Real Gross Domestic Product Growth: 7% (down from 9.2% in 2010; predicted to average 5.4% from now until 2015).
Consumer Price Inflation: 14.5% year-on-year in 2011 (up from 10.4% y-o-y in 2010).





Industry Developments
China is set to increase soy oil imports from Argentina after having settled a six month trade dispute between the two countries in November 2010. Indeed, the Chinese government announced on July 21 it will import 500,000 tonnes of soy oil in 2010/11, which represents 31% of total Chinese soy oil imports. The recovery in Argentinean soy oil exports to China was slow in H111 as the Asian country only imported 120,000 tonnes, compared to 627,000 tonnes in the first half of 2010.
As droughts and government interventions have contributed to soaring beef prices in recent years, per capita consumption has been in decline, and in 2011 it is projection to reach its lowest level in 50 years. Although high prices should stimulate production over the medium term, we expect beef consumption to continue declining slowly as consumers switch to poultry. As railways and better refrigeration techniques allowed the country to become one of the world's largest beef exporters for decades. However, the droughts in 2008 and 2009 have forced many farmers to liquidate herds, which tightened the industry significantly and led to soaring prices.
We expect a rise d area planted to corn to boost Argentine output in 2011/12, while the country's soybean production will remain stable. Indeed, Argentine area harvested for corn is set to increase 12.5% year-on-year (y-o-y) in 2011/12, while area harvested for soybean is set to increase by only 5.4% y-o-y. As a result, we projection Argentine corn production to increase 13.7% y-o-y to 52.4mn tonnes in 2011/12 and soybean output to increase 3.4% y-o-y to 24.2mn tonnes. This is because higher global corn prices have increased farmers' margins, especially as corn production costs are generally lower (an average of US Dollar 110.1/tonne in 2010/11) than costs for soybean (US Dollar 125.8/tonne).

Table Of Contents

Executive Summary .. 5

Key Trends 5



Industry Developments . 5
Industry SWOT Analysis 7
Argentina Agricultural SWOT 7
Argentina Political Environment and Risk Analysis . 8
Argentina Economic Environment and Risk Analysis .... 8
Argentina Business Environment SWOT 9

Market Projection Scenario ... 10
Argentina Sugar Outlook . 10
Argentina Sugar Production, Consumption and Trade .... 11
Argentina Sugar Production, Consumption and Trade .... 12
Argentina Livestock Outlook . 14
Argentina Poultry Production, Consumption and Trade . 15
Argentina Pork Production, Consumption and Trade . 15
Argentina Beef and Veal Production, Consumption and Trade .... 15
Argentina Poultry Production, Consumption and Trade . 19
Argentina Pork Production, Consumption and Trade . 19
Argentina Beef and Veal Production, Consumption and Trade .... 19
Argentina Dairy Outlook . 21
Argentina Milk Production, Consumption and Trade . 21
Argentina Butter Production, Consumption and Trade ... 22
Argentina Cheese Production, Consumption and Trade .. 22
Argentina Whole Milk Powder Production, Consumption and Trade .. 22
Argentina Milk Production, Consumption and Trade . 24
Argentina Butter Production, Consumption and Trade ... 24
Argentina Cheese Production, Consumption and Trade .. 24
Argentina Whole Milk Powder Production, Consumption and Trade .. 25
Argentina Grains Outlook 26
Argentina Wheat Production, Consumption and Trade ... 27
Argentina Corn Production, Consumption and Trade 27
Argentina Barley Production, Consumption and Trade ... 27
Argentina Sorghum Production, Consumption and Trade .... 28
Argentina Wheat Production, Consumption and Trade ... 31
Argentina Corn Production, Consumption and Trade 31
Argentina Barley Production, Consumption and Trade ... 31
Argentina Sorghum Production, Consumption and Trade .... 31
Argentina Rice Outlook .... 33
Argentina Rice Production, Consumption and Trade . 33
Argentina Rice Production, Consumption and Trade . 35
Argentina Soybean Outlook .. 36
Argentina Soybean Production and Consumption . 37
Argentina Soybean Production and Consumption . 40
Commodity Price Analysis .... 42
Monthly Grains Update ... 42
Corn ... 42
Rice .... 43
Soybean .. 44
Wheat . 45
Monthly Softs Update .. 46
Cocoa. 46
Coffee. 47
Palm Oil . 48
Sugar . 49

Market Projection Scenario ... 50
Investments Into Argentina Continue But BMI Remains Cautious .... 50
Macroeconomic Projection 52
Argentina - Economic Activity ... 54
Brewers Investing In Argentina But BMI Continues To Warn Of Economic Imbalances 55
BMI Projection Modelling .... 57
How We Generate Our Market Projections .... 57

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