February 13, 2009

Argentina has authorised new exports of corn and wheat from the 2008-09 harvest, days after modifying regulations so it is easier to calculate amounts available for export from each harvest, a press official at the country's agricultural trade office said Thursday (February 12).

 

ONCCA, as the trade office is called, is allowing exporters to ship six million tonnes of corn and 520,000 tonnes of wheat from this season's expected output, it said in a statement posted on its Web site late Wednesday.

 

The move is designed "to ensure domestic supplies and constant exports," it said.

 

ONCCA must approve all grain and beef exports and only clears shipments in excess of domestic demand and an additional 20 percent cushion, a practice designed to help prevent shortages and spikes in domestic food prices.

 

Before this week, the trade office decided the amounts available for export once it had confirmed the existence of sufficient stocks to meet domestic demand and the cushion.

 

But on Monday it changed regulations so that now exporters no longer have to wait until ONCCA declares the final export amounts. Exporters and grain traders can now calculate expected export amounts based on the periodic crop production estimates put out by Argentina's Agriculture Secretariat.

 

The change, which was a request of grain traders, "will give more predictability for trading in the futures markets," the ONCCA press official told Dow Jones Newswires.

 

"Export amounts can be calculated before ONCCA releases the final numbers," taking into account domestic demand, estimated production and the 20 percent cushion, he said.

 

On Wednesday, ONCCA said that based on the Secretariat's production estimates there is a surplus of 6,050,400 tonnes of corn and 520,056 tonnes of wheat for export.

 

The ONCCA press official said the amount available for wheat exports is low because a prolonged drought -- one of the worst in decades -- has cut wheat yields and production. As well, farmers switched to other crops, limiting the area planted to the crop, he added.

 

In late January, ONCCA rejected wheat export permits while it waited to calculate stocks -- the amount includes what is held by millers and crushers, as well as the grains stored in silos -- so as not to put at risk domestic supplies. A source there at the time said domestic market requires 6.1 million tonnes of wheat.

 

On January 21, the Agriculture Secretariat lowered its estimate for wheat production to 8.3 million tonnes from the nine million tonnes forecast in December.

 

Estimates suggest domestic demand will be about seven million tonnes this year, making very little available for export over the 1.2 million tonnes of new crop exports already approved by ONCCA.

 

For corn, the six million tonnes authorised for export from the 2008-09 crop is less than the total of around 14.7 million tonnes shipped from the 2007-08 crop.

 

On February 6, the Buenos Aires Cereals Exchange said it expects corn production to be on the lower end of a range of 12.3 million to 13.7 million tonnes, down from 2007-08 output of more than 20 million tonnes. Higher production costs for corn relative to soy and dry weather early in the planting season are blamed for a decline in the area planted to corn this season.

 

Domestic demand is currently pegged at 6.1 million tonnes, but the amount withheld for domestic consumption may be increased somewhat due to increasing use of corn in feedlots.