Monsanto, Dow Argentina Chemical Sales Soar on Rains

 Monsanto Co., Dow Chemical Co. and BASF SE said pesticide sales in Argentina are booming as farmers fight to save a record soy crop from insect and fungi attacks.

Dow’s AgroSciences unit expects record pesticide sales this year after warm winter temperatures favored the multiplication of insects going into the southern hemisphere’s summer, Juan Carlos Lissarrague, the company’s manager of insecticide marketing, said in a Feb. 4 telephone interview from Buenos Aires. He declined to give specific financial details.

Farmers in Argentina, the world’s third-largest producer and exporter of soybeans, planted 19 million hectares (47 million acres), the country’s largest crop on record, with a forecast of about 53 million metric tons. In 2009, the worst drought in a century reduced the crop to 32 million tons.

Monsanto expects sales of its Roundup weedkiller to equal the record of the 2007-2008 season, Juan Farineti, head of crop protection for Monsanto in Argentina, said in a Feb. 5 phone interview. He declined to give financial details. Sales fell in the 2008-2009 season when crops suffered from prolonged drought.

“The difference between the current season and 2007-2008 is that back then farmers at this same stage were already buying herbicide to store for the following year, while this year they are buying mainly to use in the current season,” said Farineti.

El Nino

Crops in Argentina and Brazil are benefiting from torrential rains created by El Nino, a weather system that forms in the Pacific Ocean and influences climate worldwide. The rains, combined with hot weather, have also increased the presence of fungi and weeds that attack the soybeans.

“Last year, about 20 percent of all Argentine soy crops were sprayed with fungicide, but this year it has gone up to about 40 percent,” Marcos Lafuente, head of soy crops for BASF in Argentina, said in a Feb. 4 telephone interview from Buenos Aires. “Two years ago, Frogeye Leaf Spot was basically a non- existent fungus in Argentina and now it’s almost an epidemic.”

BASF is one of Argentina’s two largest fungicide sellers, together with Syngenta AG. BASF Global Agricultural Solutions division is responsible for 5 percent of the company’s global sales, according to the latest annual earnings report.

In the early weeks of December, wheat farmers in Argentina rushed to spray crops to protect them from the biggest plague of locusts in 30 years. The plague was mostly centered in southern Buenos Aires province, where about 40 percent of the country’s wheat is produced and which was one of the region’s most affected by the drought in recent years. Locusts thrive in dry weather.

Insecticide Sales

“Sales of insecticide have grown as much as 50 percent market-wide,” Dow’s Lissarrague said. “This doesn’t mean that our sales have necessarily grown this much, since there are other companies too, but it is a record year for us.”

In Argentina’s main soybean producing area, located in northern Buenos Aires province and Santa Fe province, farmers are fighting to control fungi, such as Frogeye Leaf Spot, which thrive in humid weather. The fungus can lower yields by as much as 15 percent, according to Tomas Parenti, a specialist with the Rosario Cereals Exchange. About 33 percent of Argentina’s oilseed is planted in the area.

The use of fungicides started to grow steadily from 2005 until it was stopped by the 2008-2009 drought, BASF’s Lafuente said. “Because of the drought, nobody applied anything.”

Dow, based in Midland, Michigan, fell 14 cents to $26.38 as of 2:44 p.m. in New York trading, while St. Louis, Missouri- based Monsanto fell $2.26, or 3 percent, to $74.47.