May 2, 2012

Argentina's 2012 fall corn, soy harvests slightly increasing

The government's weekly crop report said on Friday (Apr 27) that as compared to last year, Argentina's fall corn and soy harvests are progressing slower and with uneven yields compared with the 2010-11 season.

The current 2011-12 crop year got off to a sluggish start after many farmers delayed planting in order to avoid a drought that hit the Pampas grains belt at the height of the Southern Hemisphere summer in December and January.

Some 47% of the expected commercial-use corn harvest has been brought, lagging the 53% that had been collected at this time last year, the report said. The soy crop is 57% collected - up a brisk 16 percentage points from last week - compared with 67% of the harvest having been collected by this point a year ago, the Agriculture Ministry document said.

The government as well as private analysts have cut their harvest projections due to the crop damage from the six-week dry spell. The South American country is the world's No. one exporter of soyoil, used for cooking and in the booming biofuels industry, and its No. two supplier of corn.

The farm sector is a key source of revenue for Argentina. Its economy has been slowed by fallout from Europe's debt crisis and lower demand from key trade partner Brazil. Not only grains traders but Wall Street economists are watching to see how the 2011-12 harvest progresses. On April 19 the government cut its 2011-12 soy harvest estimate to 42.9 million tonnes and its corn estimate to 20.3 million tonnes.

In the Bragado area of key growing province of Buenos Aires, the government said "early planted soy is mature, and the harvest has advanced to 66%."

In Cordoba province, which is also part of the Pampas farm belt, "soy harvesting has been completed with average yields below those recorded in the previous season," the report said.

Negative factors such as the drought and government policies that have hurt investor confidence in Argentina have meanwhile been countered by high soy prices that should help Argentine farmers stay in the black this season.

US corn and soy futures rallied on Friday (Apr 27) on strong demand, with soy topping the key threshold of US$15 per bushel for the first time in nearly four years. Last week Argentina said it would expropriate the country's biggest oil company, YPF, drawing condemnation from foreign investors and trade partners already disgruntled by government-imposed import curbs.

President Cristina Kirchner is popular among voters, many of whom see her state-centric policies as favouring the poor. Critics say moves such as the YPF nationalisation and her government's 2008 takeover of Argentina's private pension system scare off investment needed by the farm sector in order to remain competitive.

Buenos Aires Grains Exchange on Thursday reduced its soy harvest estimate to 43 million tonnes, 13% down from last season. When planting of the 2011-12 soy crop began, analysts estimated output of up to 53 million tonnes. The exchange sees corn output of 19.8 million tonnes, far under initial analysts' estimates of up to 30 million tonnes. Grains exporters with operations in Argentina include Cargill Inc, Bunge Ltd, Molinos Rio de la Plata, Noble Group Ltd and Louis Dreyfus.