May 7, 2009

Conditions for Argentina's wheat planting remain poor, with dry weather and tight credit leading to expectations of greatly reduced wheat area this season, the Buenos Aires Cereals Exchange said in its weekly crop report Wednesday (May 6).

Argentina's 2009-10 wheat planting is expected to fall 18.6 percent on-year to 3.7 million hectares, the lowest amount since planting records have been kept in the country, the exchange said.

While continued dryness is the main reason for the drop, farmers are also facing high financing costs and the economic strain caused by losses to the 2008-09 soy and corn crops due to drought.

In addition, climate models predict a dry fall and winter, with temperatures above average.

"Faced with this scenario, its possible that planted area may fall even further," the exchange said.

The exchange cut its estimate for 2008-09 corn output by 300,000 tonnes to 12.7 million tonnes as the extent of drought damage became clearer. Last week, the exchange cut its forecast by 500,000 tonnes. To date, farmers have harvested 81.2 percent of the corn area.

With 82.8 percent of the soy crop harvested to date, yields continue to be dismal due to the serious drought damage, according to the exchange.

To date, yields average just two million tons per hectare, down 29 percent from last season.

Last month, the exchange slashed its forecast for 2008-09 soy production by almost 10 percent, pegging output at just 34 million tonnes.

Despite record area planted with the oilseed, a brutal drought saw yields plummet. The exchange's forecast marks the lowest soy output in four years.