December 6, 2004

 

 

Argentina's 2004-05 Wheat Output Seen At 15 Million MT

 

Argentina's farmers will produce 15 million metric tons of wheat in 2004-05, the Buenos Aires-based brokerage Granos del Parana estimated Friday.

 

This forecast would put wheat production up 7% from a year ago, when it totaled 14 million tons, according to the brokerage.

 

"In addition to this production forecast, one has to add 1.5 million tons of carryover from 2003-04, which puts the total supply for 2004-05 at 16.5 million tons," Granos del Parana said.

 

The brokerage estimated Argentina's exportable wheat supply for 2004-05 at "not less than 9.5 million tons, compared with 8.4 million a year earlier."

 

As of Thursday, exports of 2004-05 wheat stood at about 1.1 million tons, down from 1.7 million tons of new crop sales a year ago at this time.

 

The slower sales, combined with higher local and global output, means prices likely will remain at or below current levels in the near-term, the brokerage said.

 

The top buyer of local wheat, Brazil, is expected to import 4 million tons of the 2004-05 crop, Granos del Parana said. This is down from a historical average of bewteen 6 million and 7 million tons.

 

As Brazil's own farmers produce more wheat, millers there need to import less and less from Argentina.

 

Meanwhile, global wheat production is up largely in countries known for producing lower-quality, lower-priced wheat. Roughly one-third of total output is expected to come from the E.U. and countries that belonged to the former Soviet Union.

 

This, the brokerage said, will tend to keep prices down.

 

"In summary, because of both the domestic and international context, we don't see any positive factors for the crop's price," Granos del Parana said.

 

Cash wheat sold for ARS255 ($1=ARS2.977) per metric ton at the Rosario Cereals Excahnge Friday. Future wheat for January delivery sold for $87 per ton. Futures prices are always measured in U.S. dollars.

 

The U.S. Department of Agriculture has also estimated Argentina's 2004-05 wheat production at 15 million tons.

 

The Agriculture Secretariat see 2004-05 wheat output at between 14 million and 15 million tons and the Buenos Aires Cereals Exchange sees it at 14.82 million tons.

 

As of Nov. 26 farmers had planted 16% of the 2004-05 crop, Secretariat data show.