August 4, 2015

Argentina's corn exports to fall in next season: USDA

Corn exports from Argentina are likely to decline by one-third in the next season, US officials said.

The trend was attributed to weak finances among farmers, a problem blamed on a multitude of economical causes including lower global grain prices, costlier productions, and high export taxes and internal transport costs.   

The USDA's Buenos Aires bureau noted that the 2014-15 season produced "high yields", but mostly with "negative economic returns", thus affecting sowings for the following season. The situation exacerbated with high local inflation, a devaluating peso, restriction of credits and high interest rates.

Corn is singled out for unprofitability of its cultivation as well as its high requirement of inputs, such as fertilisers. In addition, the government's efforts to limit exports could keep local prices lower than international rates.  

Farmers are also facing acute uncertainties as the presidential elections in Argentina nears. Despite supports from top candidates for the development of the agricultural industry, concerns linger over the kind of future policies implemented and the inauguration of a new administration in December, by which time the 2015-16 corn sowing season is about to conclude.  

 The Buenos Aires bureau expects a major shift to soybean from corn if the same polices are still in place. The consequences could entail a fall in plantings by 15% to 30% in 2015-16, as well as a 21% drop in production, to 21 million tonnes, the bureau added.

For the season commencing in March 2016, exports are expected to hit a seven-year low of 11.5 million tonnes, a 32% decrease year-on-year

In the meantime, corn harvest for the 2014-15 season is expected to reach 26 million tonnes, according to the Buenos Aires grains exchange. The percentages is close to leveling with an USDA estimate of 26.5 million tonnes.