Argentina's second soybeans suffer up to 80% damage on drought: BCR

New Delhi — Argentina's second crop soybeans suffered irreversible damage of up to 80% in primary regions owing to drought conditions for the past few weeks, the trade association Rosario Board of Trade said on Friday, despite the recent rains.

While, areas such as San Martín are expected to have only 10% damage to the second soybeans, areas like Bigand have 30-80% crop damage, BCR said.

Some parts of Buenos Aires and Córdoba have experienced extended dry weather, which could badly affect the yield of second soybeans.

In Argentina, first crop soybeans are planted in late October, while the second crop soy are planted in late November, immediately after the wheat harvest.

Late planted second soy crops are vulnerable to weather extremes.

Because of the extended dry spell since late February in primary soybean producing regions of Buenos Aires and La Pampa, Argentina's 2019-20 crop year (November - October) soy output forecast has been cut by 3.5 million mt on previous estimate to 51.5 million mt, BCR said earlier on Thursday.

Hot and dry weather continued across Argentina over the weekend, maintaining stress on second crop soybeans and late growth of corn and first crop soybeans, weather forecaster Maxar said on Monday.

Increasing temperature has led to a rapid decline in soil moisture levels across the major growing areas in the country.

Dryness is likely causing yield declines for second crop soybeans, which are still in development phase.

Soybean crop requires sufficient rain and soil moisture level during the planting and flowering phase.

Wetter weather will finally return to southern Argentina this week, which will begin to improve soil moisture across Buenos Aires, southern Cordoba, and La Pampa, Maxar said.

Rainfall is expected to become more widespread during the 6-10 day period, which should improve soil moisture and favor late growth of crops.

TAX IMPACT

Soy crop damage in Argentina comes at a time when the soybean farmers are already struggling with the government's tough fiscal measures.

The new Argentinian government, headed by President Alberto Fernandez, has recently hiked export tariffs on soybeans and its derivatives to 33% in March, from 30% in December.

Already facing tough competition from Brazil and US, world's top soybean producers and exporters, the Argentinian farmers face uncertain future, due to the latest export tax hike, sources said.

The farmers could be forced to crop hoardings amid the ongoing tariff negotiations and protest with the government.

Chinese buyers generally prefer Brazilian and US soybeans over lower-priced Argentinian beans, a local Chinese crusher said.

On average, the protein count in Argentinian beans is less compared with the other two origins

Protein count is an important parameter for Chinese soy buyers as the country processes over 80% of imported raw soybeans into protein-rich animal feed, to meet its burgeoning domestic meat consumption.

Argentina is currently the world's third-largest soybean producer and exporter, and the largest soybean meal and oil supplier.