September 20, 2010

Dry weather limits Argentine wheat crop recovery

Argentina's wheat crop may not recover as far as had been hoped because of the dry weather which has set back early progress, officials have said, as Russia's harvest suffered a fresh downgrade too.

Argentina's farm ministry, in its first estimate of the 2010-11 crop, pegged wheat output at 10-11.2 million tonnes.

While above last year's harvest, which the ministry estimates at 7.5 million tonnes but US analysts have pegged at 9.6 million tonnes, the figure is below an estimate of 12-13 million tonnes voiced early in the planting season by Cristina Fernandez, Argentina's president, and farm minister Julian Dominguez.

The USDA has forecast a 12.0-million-tonne crop.

The farm ministry said its lower figure reflected observations that in the majority of farming areas, the lack of soil moisture is evident despite the rainfall in recent days.

Argentina's wheat crop-whose 2009-10 decline reflected the lowest sowings in a century as growers battled with drought and hefty export taxes-is viewed by traders as likely to have a large influence on the course of the wheat price rally.

Strong southern hemisphere crops would provide some relief to export supplies squeezed by Russia's grain export ban, and weaker shipments from other former Soviet Union countries.

Meanwhile, Ukraine on Thursday revived the spectre of its own export curbs, with Mykola Prysyazhnyuk, the country's agriculture minister, appearing to contradict a reassurance from Prime Minister Mykola Azarov last week that the country would not implement restrictions. He pegged the country's 2010-11 grain exports at 13 million tonnes, down from 21.5 million tonnes the year before.

In neighbouring Russia, SovEcon analysts cut by a further 500,000 tonnes, to 41 million tonnes, their forecast for the country's drought-savaged wheat harvest, a drop of 21 million tonnes year on year. Although harvesting had nearly finished in European Russian, in Siberia, combines were being delayed by rains and sometimes snow, SovEcon said.