September 9, 2011

  

Argentine corn area to surge despite dry weather

 

 

In spite of the threatening dry weather, Argentine famers may increase corn sowings by 20% due to good potential earnings.

 

Many forecasters have warned that farmers in the South American country, the second-biggest exporter of the grain after the US, will trim plans to expand 2011-12 corn acreage, thanks to dry weather.

 

The Buenos Aires Grain Exchange two weeks ago limited to 300,000 hectares, or 9%, its estimate for the rise in plantings, given less-than-ideal conditions outside the northern and southern crop belts.

 

However, a respected analyst said that the area could rise by twice as much to 3.8 million hectares, thanks to the potential presented by high corn prices to growers for which the grain costs about US$2.30 a bushel to produce.

 

Industry estimates show that for farmers to make the same margins from soy as they can get from 10 tonne-a-hectare (154-bushels-an-acre) corn would require a yield in the oilseed of six tonnes per hectare (87 bushels per acre).

 

In fact, many farmers fall short of these figures, with the county's average yields considerably less impressive.

 

"But it is much easier to achieve a 154-bushels-an-acre corn yield in Argentina than it is to achieve an 87-bushels-an-acre soybean yield," the analyst said.

 

"Therefore, even though corn production is more capital intensive, farmers in Argentina are opting for more corn due to the profit potential."

 

Other observers have noted the agronomic need for Argentina farmers to plant more corn, to boost crop rotation after years of rising soybean sowings.

 

Sowings were likely to soar even if fears are realised of a return of the La Nina weather pattern, which would likely extend the spell of drier-than-normal weather.

 

The UN last week said that there was a 50:50 chance of cooler water temperatures noted in the Pacific, signalling a La Nina ahead.

 

"If the springtime weather ends up being dryer than normal, the farmers in Argentina will extend their planting window for corn because the potential return on investment is just too good to pass up," the analyst added.

 

He compared the situation to that in this US spring, when strong corn prices encouraged farmers to plant their corn even though the official planting window had closed.

 

Farmers' willingness to press on despite poor conditions was likely to be reflected in yields, which were likely to fall short of the record 8.47 tonnes per hectare achieved in 2009-10, according to USDA data.

 

Even so, the analyst cited estimates of a crop of 27-28 million tonnes, easily beating the record 23.3 million tonnes recorded two seasons ago.

 

The USDA currently estimates the 2011-12 crops at 26 million tonnes, although its forecasts are up for revision in a monthly report due on Monday (Sep 12).