September 15, 2009

Scattered showers in Argentina last week helped improve corn planting conditions, although planting is proceeding slowly due to continued dryness in many areas, the Agriculture Secretariat said in its weekly crop report late Friday (Sept 11).

 

In the Rafaela district of Santa Fe province, the rainfall "improved soil moisture levels, allowing the start of early corn planting," the Secretariat said. However, "in the areas where showers were light, new rain is needed to start planting."

 

With the recent rain improving prospects for corn, the government's lifting of export taxes for small-scale growers is likely to boost production, but area is still seen down compared to last season.

 

On Thursday (Sept 10), President Cristina Fernandez announced the elimination of the export tax on wheat and corn for small and medium-scale growers, in a move designed to mollify disgruntled farmers and stimulate increased corn planting.

 

Wheat exports are currently taxed at 28 percent, while corn exports are taxed at 25 percent. Soy exports carry the highest export duty of 35 percent.

 

If the programme is effectively implemented, it could increase the corn area by 300,000 hectares, said AgriPac Consultores analyst Pablo Adreani.

 

Eduardo Sierra, chief climatologist at the Buenos Aires Cereals Exchange, agreed that the tax relief would likely boost the planted area to around two million hectares, compared to the exchange's current forecast of 1.875 million hectares of corn.

 

The government has pegged domestic consumption of corn from the 2009-10 crop at eight million tonnes, leaving an equal amount available for export, according to the Rosario exchange.

 

However, analysts point out that the optimal period for planting corn has passed, which may limit the gains. The government's plan is also short on details, which may make farmers hesitant to gamble on actually collecting the tax rebates and planting corn.

 

In addition, many of the small-scale farmers whom the tax break targets are operating in the black, or have tax debts which may make it difficult for them to collect, Adreani said.

 

The Rosario Grain Exchange forecasts total corn planting of 2.3 million hectares, with 2009-10 production at about 16 million tonnes.

 

Half of that amount will likely be set aside by the government for domestic demand, leaving just eight million tonnes available for export, according to the Rosario exchange. The USDA forecasts seven million tonnes of exports from the 2009-10 corn crop.

 

Argentina's wheat crop is developing well across much of the farm belt due to increased rainfall.

 

In the Bragado district of Buenos Aires province, "the general state of the crop is good or very good, having notably improved due to the showers during the beginning of September," the Secretariat said.

 

Wheat planting is complete, with 2.8 million hectares seeded with the grain, according to the Buenos Aires Exchange. That marks a 40.5-percent drop in area from last season and is the lowest area on record.

 

The Buenos Aires exchange hasn't forecast production yet, but the Rosario Grain Exchange said 2009-10 wheat production is likely to total about 7.4 million tonnes.

 

That's down from 8.7 million tonnes in 2008-2009, and down sharply from the average of 14.76 million tonnes over the previous five years.

 

With domestic demand pegged at 6.5 million tonnes by the government, just 900,000 tonnes of wheat are likely to be left over for export from the 2009-10 crop. The USDA is expecting Argentina to export 1.5 million tonnes of wheat and wheat flour from the 2009-10 crop.

 

Early sunflower-seed planting is progressing slowly, with farmers waiting for increased showers in many regions, particularly in Santa Fe province, the Secretariat said.

 

Last week, the Buenos Aires exchange trimmed its forecast for sunflower-seed area by about 100,000 hectares, to 2.1 million hectares, slightly under last year's crop.

 

As of Wednesday (Sept 9), 7.8 percent of the forecast sunflower-seed area had been planted, according to the Buenos Aires exchange.

 

The Rosario Grain exchange forecasts sunflower-seed production of 3.4 million tonnes, up from about three million tonnes last season when yields suffered due to drought.

 

Soy production is expected to rise sharply again next season.

 

Planting is likely to surge to between 19 million and 20 million hectares during the 2009-10 season, according to private analysts. That would shatter the record set during the 2008-09 season, when farmers seeded 16.6 million hectares with the oilseed.

 

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

 

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.