June 15, 2009

Dry weather continues to hamper wheat planting, with rainfall desperately needed across much of the Pampas for farmers to proceed with wheat planting, the Agriculture Secretariat said in its weekly crop report Friday (June 12).

 

"Soil moisture reserves continue to be low or nonexistent," the Secretariat said.

 

The Secretariat hasn't forecast wheat area yet, but the Buenos Aires Cereals Exchange forecasts 2009-10 wheat planting of just 3.2 million hectares (7.9 million acres), down 30 percent on the year and the smallest amount planted since records have been kept.

 

In addition to the dryness, farmers are hesitant to plant the crop due to low prices because of government intervention in wheat markets. They also face high financing costs and the economic strain caused by losses to the 2008-09 soy and corn crops due to drought.

 

"All signs are looking bad for wheat," the Buenos Aires Cereal Exchange's top climatologist told Dow Jones Newswires last Friday. "If you ask seed-sellers who's buying wheat, they say nobody," Sierra said.

 

Farmers have harvested virtually all of the 2008-09 soy crop, according to the Secretariat. Just 1 percent of the planted area remains to be harvested.

 

The Secretariat hasn't forecast output, but the exchange pegs production at a dismal 32 million tonnes.

 

Early in the season, analysts had expected output to approach 50 million tonnes, but severe drought damage caused yields to plunge. Yields were the lowest in more than a decade, according to the exchange.

 

Meanwhile, soy production is expected to rise sharply again next season.

 

Soy planting is likely to surge to between 19 million and 20 million hectares during the 2009-10 season, the exchange's Sierra said. That would shatter the record set during the 2008-09 season, when farmers seeded 16.6 million hectares with the oilseed.

 

In addition to weather factors, the fact that soy are the only major crop in which the government doesn't control exports is spurring farmers to plant more of the oilseed. Argentina limits the export of wheat and corn to ensure domestic supply and keep down local prices.

 

"All signs point to a continued expansion in soybean area," Rodolfo Rossi, the president of the Argentine soy growers association, Acsoja, said in an interview Friday.

 

To date, farmers have harvested 92 percent of the area planted with corn, according to the Secretariat.

 

Production is forecast by the exchange at just 12.7 million tonnes, the smallest crop in over a decade, due to extensive drought damage.