June 22, 2012

Argentina soy, corn outlook bleaker as harvest approaches

As harvest time approaches, Argentina's biggest grains exchange has further revised down its forecast for 2011/12 soy output this week, from May's 40.9 million tonnes, to 40.5 million tonnes.

Farmers in the world's top supplier of soy-oil and soy-meal have brought in 98% of this season's drought-afflicted crop, Rosario grains exchange said in a report.

Poor yields and some key growing areas prompted the downward revision. "There were some negative adjustments in yields in Buenos Aires, Cordoba, Entre Rios and Chaco, and the areas that could not be harvested increased," the report said, adding that average yields were 2.26 tonnes per hectare.

Argentina is also the world's No 2 corn supplier after the United States and the dry spell that parched fields earlier in the season had a dramatic impact on crops.

Growers have gathered 73% of the 2011/12 corn crop, which the exchange said it expected to total 19 million tonnes, way down from initial estimates for a record crop of as much as 30 million tonnes.

"The advance of the harvest cements expectations for the lowest yield obtained in 15 years of 5.3 tonnes per hectare," the report said. As farmers advance with late harvesting, Rosario grains exchange held its outlook for 2011/12 corn production at 19 million tonnes. Meanwhile Argentina's government authorised this week the export of 6 million tonnes of 2012/13 wheat as farmers advance with early plantings, officials said.

Argentina is the world's sixth-biggest wheat exporter and the key supplier to neighbouring Brazil, but growers have been planting less of the crop in recent years due to complaints about the government's export quota system.

In past years, officials have authorised smaller quantities for export, seeking to guarantee cheap and plentiful supplies in the local market.

Growers say that has depressed the prices they get paid by millers and exporters and some have started planting alternative crops such as barley and oilseed rape.

"Due to the forecasts that we've got at the moment, President Cristina Fernandez has made the decision to free up 6 million tonnes from the 2012/13 season for export," Vice President Amado Boudou said in a statement.

He estimated the country's own wheat needs at 6.5 million tonnes, suggesting the government expects a harvest of at least 12.5 million tonnes.

One million tonnes of the export approvals will be reserved for farming cooperatives, Boudou added.

Slightly more than a quarter of the 3.8 million hectares estimated for 2012/13 wheat plantings has already been sown, the Buenos Aires Grains Exchange said in its latest weekly crop report.

If the wheat area estimate is accurate, it would mark a 17% decrease from 2011/12 plantings, reflecting farmers' pessimism about potential profits.

Argentina produced 13.2 million tonnes of wheat in the last harvest with a planting area of 4.6 million hectares, according to government sources.