Uruguay: Soybeans Up On Argentine Investments
29 April 2008 The soybean planted area in Uruguay could be up as much as 25% following Argentinian policy changes that led to increased investment in Uruguay, much of which is coming from Argentine producers looking for an alternative to Argentina’s new export tax regime. The US Dept. of Agriculture’s Foreign Agriculture Service (USDA-FAS) notes that Uruguay presents an enticing investment opportunity because it still has a large amount of land that could be converted to production agriculture. In addition, as cattle production on pastures has proven less profitable than soybean production, additional shifts out of cattle pastures and into soybeans are expected.
Internal Uruguayan prices exactly reflect international prices, while Argentine prices received by producers are reduced due to the new export tax system. This is leading many large Argentinian farmers to take up land in Uruguay.
Although Uruguay’s sunflower area has fallen in recent years due to stem canker, USDA-FAS expects that area will expand in the 2008/09 crop year due to high international prices and the availability of more resistant varieties.
Production Forecast Reports indicate that the 2007/08 crop is currently about 40% harvested, USDA-FAS says. It is estimated that total production will reach 895,000 tons from a harvested area of 448,000 hectares (Ha).
The crop has developed well, with few pest or disease problems, and yields are above average in general, but varied across the main producing region, with the area south of Rio Negro in the “Litoral Oeste” (the main soybean production region) showing signs of low yields due to dry weather during the growing period. However, the area north of Rio Negro is expected to have higher than average yields. In the past few days, cold weather with short periods below freezing across some parts of the soybean region will likely have a small negative impact on yields of second-crop soybeans as those plants have not yet reached full grain fill. The extent of that damage is expected to be relatively small.
USDA-FAS forecasts that the 2008/09 crop will increase in planted area by 20% to reach 540,000 Ha. Assuming average yields, this would add up to 1.08 million tons in production.
Currently, about half of Uruguay’s soybean production is carried out by foreign investors. USDA-FAS contacts indicate that Uruguay has around 4.5 million Ha of land that is apt for crop production, 2 million of which is very good. Given the current area planted to soybeans, there is enormous potential for increases in area, given the profitability of soybeans.
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