Argentina soy, corn output seen down sharply

 

 

The steep drop in output is likely to boost international soy markets, which had been expecting record output from Argentina this season.

 

Argentina is the world's third-largest exporter of corn and soy and is the leading exporter of soymeal and soyoil.

 

This season is one of the worst in decades, the exchange said. Farmers have been hit by "high taxes, the inability to take advantage of last year's high prices, tight credit, high costs during the planting period, and one of the worst droughts in memory."

 

So far this year, many parts of the farm belt have seen the lowest precipitation in 47 years, with a reduction of between 40 percent and 60 percent from historic averages, the exchange said.

 

Soy production is seen falling between 17 percent and 25 percent from last season, the exchange said. That would mean production of just 34.5 million to 38.2 million tonnes. The US Department of Agriculture is expecting Argentina to grow 49.5 million tonnes this season. 
 

Corn production is also seen plunging due to the drought, with a 33 percent to 40 percent drop in output seen. That would put production at just 12.3 million to 13.7 million tonnes. The USDA expects 18 million tonnes of corn to come from Argentina this season.

 

The 2008-09 wheat crop was also battered by the drought, with production falling 27 percent from the 16 million tonnes grown last season, the smallest crop grown in 20 years. The area harvested was the lowest seen in the last 30 years.

 

In addition, sunflower seed production is expected to fall between 20 percent and 32 percent from the 4.65 million tonnes grown last season, the exchange said.

 

The total reduction of grain output due to the drought is estimated at 22.2 to 28.8 million tonnes, representing lost export revenue of US$3.9 billion to US$5.3 billion. The lost dollars represent between 1.5 percent and 2.1 percent of GDP in 2008, according to the exchange.

 

The effect is expected to have a particularly sharp effect on the rural parts of the country, but will have a ripple effect across the nation. "Were in a year in which a sharp drop is expected in investment, consumption, employment and revenue, which will affect the broader economy," the exchange said.