September 15, 2005

Argentina increases corn planting after Hurricane Katrina

Argentine farmers are increasing corn planting in the hope of getting a record corn harvest next year, as a global corn price rise after Hurricane Katrina is likely, said Agriculture Secretary Miguel Campos.

Argentina is expected to export over 10 million tonnes of corn in 2006 to meet global market demand that US farmers will fail to, due to damages Katrina inflicted on southern US ports through which 70 percent of the country's corn and soybean crops passes.

Soybeans, its by-products soy oil and soymeal, and corn make up about 26 percent of Argentina's exports this year, according to the National Statistics Institute. The country is the second-biggest global exporter of corn and the third largest for soy.

However, analysts such as Ricardo Baccarin of Argentine grain broker Panagricola pointed out that Campos's outlook of increased corn exports is too optimistic because of Argentina's 22.5-percent tax rate on corn exports, which would dampen production due to loss of profitability. There would also be competition from an expected increase in global corn output.

Campos said the government would try to improve profit margins on corn by permitting new varieties of GM corn, which would make it cheaper for farmers to produce the crop. It would also help farmers alternate corn planting with soybeans to avert depleting soil nutrients.

Argentina allowed the planting of Syngenta AG corn in August and the production of a Monsanto variety in July.