Argentina deal on grain exports expected next week

 

 

Argentina is working on an agreement with exporters to open up corn and wheat exports while ensuring adequate domestic supply, Cabinet Chief Anibal Fernandez announced Thursday (Aug 6).

 

The government and grain exporters are expected to ink a deal next week, Fernandez said at a press conference.

 

Wheat and corn exports are tightly regulated to ensure local supply and shield consumers from rising food prices. The government sets aside a predetermined estimation of domestic demand and then only clears the surplus for export.

 

Exports of corn and wheat are likely to fall sharply next season due to a steep drop in area planted with those grains.

 

According to the Buenos Aires Cereals Exchange, wheat area is expected to total 2.75 million hectares in 2009-10, down 40.2 percent on the year and representing the smallest area going to wheat in more than 100 years.

 

The Rosario Grain Exchange says that 2009-10 wheat production is likely to total about 7.4 million metric tonnes. That's down from 8.7 million tonnes in 2008-09, and sharply lower than the average of 14.76 million tonnes over the previous five years.

 

With domestic demand estimated at 6 million tonnes, just 1.4 million tonnes of wheat is likely to be left over for export from the 2009-10 crop, according to the Rosario Exchange.

 

However, exporters have confirmed about 1 million tonnes of old-crop wheat stocks, Fernandez said Thursday. The stocks may allow for a slight loosening of exports.

 

Meanwhile, corn area is unlikely to be more than 2.3 million hectares, with 2009-10 production at about 16 million tonnes, according to the Rosario exchange.

 

Half of that amount will likely be set aside by the government for domestic demand, leaving just 8 million tonnes available for export, according to the Rosario exchange.

 

However, about 1.5 million tonnes of old crop stocks remain, Fernandez said.

 

In addition to the anticipated deal on corn and wheat exports, the government Thursday announced increased dairy subsidies and a loosing of the export requirements on beef.

 

Beef exporters currently have to set aside 65 percent of their production for the domestic market. That amount was lowered to 30 percent, Production Minister Debora Giorgi said. In addition, the companies will no longer have to set aside the pricey cuts generally favoured for export.

 

The measures are designed to placate farm groups, who are pushing the government hard for decreased export taxes on grains.

 

However, tension remains high as the farmers lobby Congress to overturn the presidential power to set export taxes and for a decrease in those duties.