Analysts See Argie Agro Demand

Argentina is likely to experience increased demand for its agricultural exports as low domestic consumption combines with untapped arable land, analysts say. “South America needs to provide the world with incremental soybean supply,” says Alexander Bos, a London-based agricultural commodities analyst at Macquarie. “Accelerating soybean demand in Asia, especially China, is increasing the pressure on soybean supplies,” he adds. Argentina is the world’s largest exporter of soya oil and third largest exporter of soybeans, according to the Food and Agriculture Organization. The country is using only 18% of its fertile farmland, the agency adds. “Argentina’s output of food is for 350m people, but there are only 40m people in the country so it will keep on being a leading food exporter with a growing importance,” says Axel Hinsch, CEO at Calyx Agro. Calyx acquires, develops, converts and sells land in Brazil, Argentina, Uruguay and Paraguay. Meanwhile, drought could affect this year’s crop in Argentina. Walter Chiarvesio, head of equity research at Santander Rio, says soya output could fall to 50m tons, down from predictions of 52m-53m tons for the year and a recorded 55m tons for 2010. “The outlook is good because prices are high and production has not gone down that much, which is positive for the sector,” Chiarvesio says. Argentine agriculture companies are also making significant investments in technology, according to Hinsch. “Los Grobo Agropecuaria has made big investments, and is using new technology and as a result has grown significantly,” says Gabriel Beramendi, an analyst at Argentine advisors firm Prisma Invest.