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Argentina Agribusiness Report Q3 2012 - New Market Research Report

Recently published research from Business Monitor International, "Argentina Agribusiness Report Q3 2012", is now available at Fast Market Research


Boston, MA -- (SBWIRE) -- 07/23/2012 -- BMI View: Despite our forecast for a disappointing 2011/12 grains season owing to unfavourable weather conditions, Argentina will still run a surplus in almost all commodities. One of the main weaknesses of the sector is the country's inconsistent export policy, which leads to recurrent farmers' strikes and distrust from the country's buyers. This also discourages farmers from investing and producing more in the longer term, resulting in reduced yields and crop quality. That said, the sector is likely to have plenty of production incentives in the coming years, and we expect Argentina to remain a key and integrated player in the global agricultural markets.

Key Forecasts

- Sugar production growth to 2015/16: 37.9% on the 2010/11 level to 2.8mn tonnes. We expect the amount of sugar cane diverted towards ethanol production to increase. The strong increase in sugar cane planted will translate into greater centrifugal production as well.
- Pork production growth to 2015/16: 15.9% to 357,060 tonnes. This will be driven by the government's efforts to reduce the proportion of beef in the local diet in order to free up more for export.
- Soybean consumption growth to 2016: 15.4% to 46.9mn tonnes. Consumption will be boosted by the government's support of biodiesel production and by strong export demand for soybean oil and soybean meal from China.
- 2012 real GDP growth: 4.0% (down from 9.3% in 2011; predicted to average around 4% to 2016).
- 2012 consumer price inflation: 21.0% average (from 9.8% average in 2011).

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Industry Developments

We have revised down our corn production expectations for 2011/12, as extremely dry conditions and very high temperatures at the end of 2011 have reduced output. The areas most affected are in the country's key corn belt, including Buenos Aires, Santa Fe and Cordoba. Tensions are rising again between the government and grains and soy producers in Argentina, as the Buenos Aires province decided a new land tax hike. This could put significant pressure on farmers' profits and limit production incentives in one of the country's largest grains-producing regions.

We are forecasting steady growth in Argentine poultry production in 2011/12 as consumers turn towards this healthier and increasingly cheaper option. We forecast poultry production growth in Argentina to surpass beef and pork output growth in the medium term because of increased investment in the sector in genetic improvement, high-quality feed and sanitation. Furthermore, poultry farmers benefit from easy access to feed grains and do not face export restrictions. Output will also be fuelled by strong demand from the export market as currency devaluations make Argentina very competitive and avian flu hampers Asian rivals.

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