July 21, 2009

Argentine wheat conditions vary widely, with some areas benefitting from recent showers, but others continuing to suffer from insufficient rainfall, according to the Agriculture Secretariat's weekly crop report.

 

In the Bahia Blanca district of Buenos Aires province, an important wheat growing area, "day by day the crops are showing damage due to the drought, which is causing a considerable reduction from initial planting intentions," the Secretariat said late Friday (July 17).

 

"However, farmers are ready with seed and waiting for better conditions to plant," the Secretariat said.

 

The Secretariat hasn't forecast area or production yet, but the Buenos Aires Cereals Exchange forecasts 2009-10 wheat area at 2.8 million hectares, down 39.1 percent on the year and the smallest area going to wheat in over 100 years.

 

On Friday, the Rosario Grain Exchange said that 2009-10 wheat production is likely to total about 7.4 million tonnes.

 

That's down from 8.7 million tonnes in 2008-09, and down sharply from the average of 14.76 million tonnes over the previous five years.

 

With domestic demand estimated at 6 million tonnes, just 1.4 million tonnes of wheat is likely to be left over for export from the 2009-10 crop, the Rosario Exchange said.

 

As of July 16, 96 percent of the area seeded with corn had been harvested, according to the Secretariat.

 

The harvest is complete except for a small amount of fields in La Pampa province and in the northern provinces, where corn traditionally matures later in the year.

 

The Buenos Aires exchange forecasts 2008-09 commercial corn production of just 12.5 million tonnes, the smallest crop in over a decade. The crop suffered extensive drought damage.

 

Meanwhile, corn area during the 2009-10 season is likely to fall sharply due to "the bad experience with this crop last season and the higher production cost compared to soy," the Rosario exchange said Friday.

 

Area is unlikely to be over 2.3 million hectares, with 2009-10 production at about 16 million tonnes, according to the exchange.

 

Half of that amount will likely be set aside by the government for domestic demand, leaving just 8 million tonnes available for export.

 

The soy harvest is complete with production forecast by the exchange 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 over a decade, according to the exchange.

 

Meanwhile, soy production is expected to rise sharply again next season. "Everything leads one to believe that despite the poor season last year, farmers are once again going to place their bets on soy," the Rosario exchange said Friday.

 

The Rosario exchange forecasts area planted with soy at 18.5 million hectares, with 2009-10 production of 50 million tonnes.

 

That would shatter the record set during the 2008-09 season, when farmers seeded 16.6 million hectares with the oilseed.

 

Of the 2009-10 total, 11 million tonnes are likely to be exported as soy, while 38 million tonnes will be processed into soymeal and soyoil prior to export. Shipments of soymeal in 2010 are estimated by the Rosario exchange at 29 million tonnes while soyoil exports are forecast at 5.3 million tonnes and soy-based biodiesel at 1 million tonnes.

 

However, some analysts see soy area rising even higher. Soy planting is likely to surge to between 19 million and 20 million hectares during the 2009-10 season, according to the exchange's top climatologist, Eduardo Sierra.

 

In addition to weather problems, 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.