July 21, 2009

The US warned that Argentina could have its lowest wheat exports in more than 20 years due to crop damage caused by the drought.

The USDA has reduced its estimation for Argentina's wheat crop from 11 million tonnes to 9.5 million tonnes.

While an improvement on last year's 8.4 million tonnes harvest, the new forecast suggests that Argentina's wheat farmers will continue to get well below their historical weight.

Argentina's annual output average 15 million tonnes in the decade before the drought set in last season. A second successive weak harvest would reduce exports even further below the long-term average of 10 million tonnes per year.

Without the large carryover stocks which helped maintain shipments at 5.5 million tonnes in 2008-09, Argentina's wheat exports will fall to four million tonnes in 2009-10, the USDA said, slashing 1.5 million tonnes from its previous forecast.

Exports have not been lower since 1988, when they hit 3.7 million tonnes. They were also at four million tonnes in 1989, official US data shows.

Low wheat exports are likely to present a headache for the government, as Argentina is dependent on agriculture for exports and income.