September 14, 2006

 

Argentina's drought lowers wheat, corn expectations

 

 

Continued drought in Argentina has reduced expectations for high wheat and corn production and will favour increased soy cultivation, according to analysts.

 

Dry conditions are affecting development of the young wheat crop and are delaying corn and sunseed planting, analysts said. Soy planting is set to begin in October.

 

Argentina's leading agricultural analysts forecast corn production of 17.78 million tonnes, wheat production of 12.27-12.6 million tonnes, soy production of 42.34-42.5 million tonnes, and sunseed production of 4.14-4.2 million tonnes. The estimates are based on an average from the analysts polled by Dow Jones Newswires.

 

Compared to last year, corn output will climb 22.6 percent, while wheat output is estimated to be unchanged or fall as much as 1.8 percent.

 

Soy production will be up 4.5-4.9 percent, while sunseed production will climb 8.9-10.5 percent.

 

Although most crops will see expanded production based on larger planted area, expectations had been much higher earlier in the year.

 

"We expected corn area to be up 10-20 percent from last year, but the adverse weather has reduced forecasts to 7-10 percent more area," Panagricola Vice President Ricardo Baccarin said. Decreased use of land for cattle pasture had raised expectations for higher production this year, Baccarin added.

 

About 25 percent of the wheat corp is in deep trouble and will suffer reduced yields, Novitas SA President Daniel Miro said.

 

As dry conditions continue and the approaching spring brings warmer weather, crop development could suffer further, Miro said.

 

AgriPac Consultores analyst Pablo Adreani sees 2006/07 wheat production at only 11.62 million tonnes, compared to the US Department of Agriculture estimate of 13.25 million tonnes.

 

In addition, 2006/07 corn seeding is delayed and area estimates will likely be reduced week by week unless moisture levels increase, Miro said.

 

There's a window until Oct 10 to plant corn, and if there is no significant rainfall before then, much of the area planned for corn will go to soy, Miro said. The later planting season and greater resistance to drought will favour soy, he said.

The higher investment required to raise corn crops also favoured soy planting, as farmers would be hesitant to risk planting corn in the face of continued drought conditions, Baccarin said.

 

Estimates for Argentina's 2006/07 crop production in millions of metric tonnes:

 

                             Wheat    Soy          Corn     Sunseed

   Daniel Miro            13.2      42            18.5      4.2

   Ricardo Baccarin    12-13    41-41.5    17.5      4-4.2

   Pablo Adreani        11.62    44.008     17.338    4.223

   USDA                    13.25    41.3        17.5         4

 

 

USDA/Argentina Agriculture Secretariat 2005/06 Production estimates in millions of tonnes:

 

   Wheat    Soy       Corn     Sunseed

   12.5       40.5       14.5     3.8