December 10, 2008
Argentine 2008-2009 wheat output may fall sharply
Wheat output from Argentina is set to fall by more than 37 percent in 2008-2009 due to slumping commodities prices, state regulations and a combination of natural disasters in farming regions.
The area sown with wheat will be at a 30-year low and producers' groups said this would be compounded by a drop of up to 25 percent in the 2008-2009 harvest of corn.
Argentina's Rural Confederation president, Mario LlambÃas, said they are expecting a wheat production drop of 10 million tonnes in 2008-2009, compared with 16 million tonnes in 2007-2008, the worst in a decade.
Argentine Agriculture Federation director Pedro Peretti predicts the fall in output will have an enormous impact on Brazil as it imports more than half its wheat from Argentina.
Argentina's poor outlook for wheat and regulatory uncertainty in the sector are hastening a switch into soy, which remains the country's most resilient crop despite falling international prices, because there is less government intervention.
Farming is Argentina's top foreign exchange earner, and the government relies heavily on hefty export tariffs to raise revenue. Argentina reduced wheat and corn tariffs last week.
A researcher of the Rural Society, Alicia Urricariet estimates the value of Argentina's total farm output will fall to nearly US$16 billion this season from US$21.5 billion in 2007-2008.
Argentina is the world's fourth largest wheat exporter.