January 13, 2006

 

Argentina's 2005/06 corn harvest seen at 14 million tonnes

 

 

Argentine farmers will produce around 14 million tonnes of 2005/06 corn, Juan Gear, president of the Argentine Corn Association (Maizar), said Thursday.

 

"This is much less than was previously expected, and way down from last year," Gear told Dow Jones Newswires.

 

A combination of good weather and solid prices led farmers to harvest a record 19.5 million tonnes of corn in 2004/05, according to the USDA. However, an extended drought has damaged the 2005/06 crop, Gear said.

 

"Production is going to decline because of a lack of rain during the flowering stages," he said. "Corn is a crop that is very sensitive to a lack of rain during key growing periods. It rained yesterday (Wednesday) and today (Thursday), and that has alleviated some of the damage, but the damage has already been done."

 

Gear said yields in some provinces will decline by 50 percent this season because of the drought.

 

Maizar's estimate puts Argentina's corn harvest down substantially from a forecast Thursday by the USDA, which put local output for 2005/06 at 16.8 million tonnes.

 

"For me, the USDA estimate is way too high," Gear said. "It does not reflect the decline in yields that we're seeing. In the best of cases, we would not get more than 15 million tonnes."

 

Corn has been losing ground in Argentina in recent decades as more and more farmers replace the crop with soybeans, which are cheaper to plant, easier to grow and more profitable, Gear said.

 

In the 1930s, long before soybeans became popular in Argentina, farmers planted as much as 7 million hectares of corn annually. However, that figure had dropped to about 5 million hectares by the 1960s, when soybeans began gaining ground.

 

This season farmers will plant around 2.5 million hectares of corn, compared with about 15 million hectares of soybeans, according to the USDA, Maizar and other groups. Soybeans now account for about half of the planted area for all Argentine crops, according to the Agriculture Secretariat.

 

Gear said that to prevent the corn area from declining even more, the government needs to enact policies that make corn more profitable.

 

"The government needs to take note of this problem," he said. "The first thing it could do would be to reduce export taxes, which total 20 percent for corn. Corn is not very profitable."