Argentinian Corn Industry Expanding Due to High Corn Demand

Maize (Corn)

Argentina

Published Jun 13, 2022

The harvest area of Argentinian corn grew by 5.7% in two seasons, going from 9.5M hectares in the 2019/20 season to 10.3 hectares in the 2021/22 season. Local producers are investing in technology, and the government is setting incentives to increase the production and quality of Argentinian corn. The current forecast for 2021/22 corn season production stands at 57M tons with a maximum export volume of 30M tons.

Corn production in Argentina has increased over the past years due to technology investments and increased demand. To cover demand, the harvest area of corn in Argentina has grown by 5.7% in two seasons, going from 9.5M hectares in the 2019/20 season to 10.3M hectares in the 2021/22 season.

Source: Argentinian Ministry of Agriculture, Livestock, and Fishing

Technology investments and government intervention has caused the increase in corn production in Argentina. Since the 2016/17 season, the Argentinian government has established incentives for more efficient practices to control weeds, pests, and soil care. Private companies have also invested in technology and evolution practices to increase the corn supply in Argentina. The largest corn seed producer in Argentina, Bayer in Buenos Aires, currently invests in technology to ensure efficiency, innovation, and digitalization to cover the national demand for corn seeds by 2030. Additionally, they are implementing sustainable practices to be carbon neutral and use 100% renewable energy by 2030.

This season producers are struggling with the supply of both seeds and fertilizers, which slows down the production increase. The Russia/Ukraine conflict has affected the fertilizer supply globally, causing a surge in the production costs of Argentinian corn. The current forecast for 2021/22 corn season production stands at 57M tons.

So far this season, 40% of the total production has been harvested despite weather complications like droughts and the La Niña. Exports have also been good so far this season. According to the Rosario Stock Exchange, Argentinian corn exports registered a record export value between March and April 2022, reaching USD 1.805B and representing a 522.4% increase from the same period in 2013. This increase is not only attributed to the price increase of corn globally but also to a higher export volume reaching 7.4M tons in two months. During this period, the average value for Argentinian corn exports was USD 240 per ton, 27% higher than the average value last year.

Demand for Argentinian corn has increased because global supply is tight due to the Russia/Ukraine conflict, and Ukraine is the third-largest corn exporter globally. South Korea has shown a high demand recently for Argentinian corn, booking about five Panamax vessels of corn for shipments in May-June 2022. Unfortunately for corn exporters, in December 2021, the Argentinian government set an export limit for corn to cover the local supply. The export limit for corn in the 2021/2022 campaign was established at 30M tons since the local demand of 16M tons. There could be modifications in the export limit during the season depending on production.

Production forecasts are positive for the 2022/23 season. The fertilizer cost in Argentina has decreased from USD 1,442 to USD 1,060 over the past month, so producers will start to reintroduce fertilizer use at normal levels for the 2022/23 season, which will increase production. Forecasts establish that in the 2022/23 corn season, Argentina will export 43.1% more corn than the average in the previous five seasons.