April 20, 2009

Argentina isn't likely to approve more corn exports anytime soon and if current expectations for low wheat planting hold, little or no wheat will be approved for export next year, the president of the agricultural trade office, or ONCCA, Emilio Eyras, told Dow Jones Newswires on Friday (April 17).

 

ONCCA must approve all farm exports and only issues permits once domestic supply has been assured.

 

The Agriculture Secretariat estimates 2008-09 corn production of 12.5 million to 13.8 million tonnes. Domestic consumption is pegged at 6 million to 6.5 million tonnes and 6 million tonnes from the crop have already been cleared for export, Eyras said.

 

The last export permits from that quota were granted this week and so far new stocks haven't been confirmed.

 

"We're really far from reaching the forecast 13 million tonnes," Eyras said.

 

As of Wednesday, farmers had harvested 59.2 percent of the soy area, according to the Buenos Aires Cereals Exchange.

 

The crop was severely damaged by drought through much of the growing season.

 

In addition, the forecast may be revised downward "given the large area still remaining to be harvested which could have lower yields than expected due to the wide scope of the drought that reached almost all the areas planted with corn," the exchange said.

 

"Up till now with the volume declared, which is very little, we're far away from arriving at a moment to open up the export registry again," ONCCA's Eyras said.

 

A return to drought conditions again ahead of winter wheat planting also threatens to see planting drop off sharply again this season.

 

Insufficient rainfall across Argentina's Pampas over the past month has led to drought conditions across much of the farm belt, which may have a serious effect on wheat planting, the Buenos Aires Cereals Exchange said in climate report Friday.

 

With winter wheat and barley planting set to kick off this month, conditions are so dry in the southern areas that wind is carrying away topsoil, "a true ecological disaster," the exchange said.

 

"Hopefully there won't be a drop in wheat production again, and we're expecting the early forecasts for wheat area soon, but it's very dependent on the drought," Eyras said.

 

Local analysts expect planted area and yields to drop sharply again next season due to low prices, high agrochemical costs and a further shift toward soy due to government intervention in wheat markets.

 

"The low price for wheat relative to other crops, the government's failure to deliver on promises to achieve minimum prices, the farmer's fragile financial situation, lack of credit and unfavourable weather will lead to a decrease in planted area of 5 percent to 10 percent [from last season], but worse will be the decreased use of technology and [planting in marginal fields], which will potentially cause yields to fall by 15 percent to 20 percent," said Lartirigoyen analyst Francisco Mariani.

 

During the 2008-09 season, Argentina's wheat production plunged to 8.3 million tonnes, the lowest output in 27 years, as farmers cut back on planted area and a brutal drought battered the crop.

 

If the grim forecasts for 2009-10 production hold, there is likely to be little available for export over the 7 million tonnes expected to be set aside for domestic use.

 

"We will only authorize wheat exports if a surplus over domestic demand is confirmed," Eyras said.