June 1, 2009

 

 

While Argentina's farm belt got some rain this week, it was not enough to provide relief to the moisture shortage across much of the Pampas, the Agriculture Secretariat said in its weekly crop report Friday (May 29).

 

"Soil moisture levels continue to be low or totally dry" in much of the area currently being seeded with wheat, the Secretariat said.

 

Wheat planting "is still dangerously delayed across much of the farm belt," the Buenos Aires Cereals Exchange said Wednesday.

 

Planting continues to lag due to very low soil moisture levels and farmers' resistance to plant the crop due to low prices because of government intervention in wheat markets, according to the exchange.

 

In addition, dry and hot weather over the past week has led to the rain that fell in mid-May being practically used up, the exchange said.

 

The Agriculture Secretariat has not forecast new crop wheat area yet, but the exchange expects wheat area to total just 3.7 million hectares, down 18.6 percent on the year, and the smallest area since records have been kept.

 

"The 3.7 million hectares seems to be a maximum ceiling for wheat area, and a greater reduction can't be ruled out if there aren't quick changes to the current weather and economic conditions," the exchange said.

 

While dry weather is the main reason for the drop, farmers are also facing high financing costs and the economic strain caused by losses to the 2008-09 soy and corn crops due to drought.

   

The 2008-09 soy crop "suffered weather problems throughout the season ... with persistent drought and high temperatures affecting yields," the Secretariat said.

 

"Seed samples show low weight and a high number of green grains," according to the exchange.

 

As of Thursday, 97 percent of the 2008-09 soy crop had been harvested, in line with the harvest pace at this time last year.

 

The Secretariat hasn't updated its forecast for 2008-09 soy since revoking the March report, but the Buenos Aires Cereals Exchange pegs the crop at 32 million tonnes, down sharply from early expectations. Early in the season, analysts had expected output to approach 50 million tonnes.

 

Despite a record area planted with soy this season, a record drought battered the crop, causing average yields to fall to 1.9 tonnes per hectare compared with 2.9 tonnes per hectare last season. Yields were the lowest in more than a decade, according to the exchange.

 

But some see the losses as even more severe. The Argentine Rural Confederation, or CRA, last week estimated production of just 30.5 million tonnes.

   

Like wheat and soy, corn yields fell sharply due to the drought, the Secretariat said.

 

According to the exchange, production is seen totalling just 12.7 million tonnes, the smallest crop in more than a decade.

 

As of Thursday, farmers had harvested 90 percent of the area planted with corn, the Secretariat said.