December 2, 2009

Locusts attack Argentina wheat, but overall impact limited

An outbreak of locusts in Argentina has sparked worries of widespread damage to the 2009-10 wheat crop, but the pests are concentrated in areas where the wheat is already in miserable condition and additional losses are likely to be limited.

The locusts are a problem in the dry areas of the west and southwest of Buenos Aires province, "so the impact will not be so important," said Panagricola S.A. analyst Ricardo Baccarin.

Wheat crops in those areas were battered by drought through much of the growing season, while wheat planted in the central farm belt is developing well. As of Nov. 26, farmers had harvested 13 percent of the forecast seven million tonnes expected to be grown in Argentina this season, according to the Agriculture Ministry.

Farmers planted the smallest area in more than 100 years with wheat this season due to dryness through the planting season and government limits on wheat exports, which spurred a shift to soy.

The government has pegged domestic demand for wheat at about six million tonnes, and only approves exports for confirmed surplus supplies.

The agricultural trade office, Oncca, has already approved export permits for what appears to be all of the surplus wheat from the 2009-2010 crop, although old-crop stocks remain a wild card as the government holds onto the data.

Since mid-2009, Oncca has approved export permits for about 2.5 million tonnes of wheat, according Rosario Grain Exchange analyst Lorena D' Angelo.

Although Oncca hasn't published data on wheat stocks since December 2008, based on the export permits issued, it appears likely that there are 1.5 million tonnes of old-crop wheat in storage, D' Angelo said on Nov. 24.

However, D' Angelo noted that the Agriculture Ministry production forecast is likely to be revised upwards, providing some additional wheat for export.