December 28, 2004

Argentina's 2004-05 Wheat Harvest Estimated At 16.35 Million MT

Argentine farmers will harvest 16.35 million metric tons of 2004-05 wheat, according to the Buenos Aires Cereals Exchange on Monday.

This estimate, the fifth increase in recent weeks, is up from 16.123 million a week ago. It is based on evidence that yields are higher than previously expected, the exchange said.

The final average yield for 2004-05 wheat will total 2.73 tons/hectare, up from the previous estimate of 2.69 tons/hectare and some 11.2% greater than that of the year-earlier period, the exchange estimated.

As of Saturday, farmers had collected 52.9% of the 2004-05 wheat crop, nearly 10 percentage points less than a year earlier because of a shortage of diesel fuel for operating farm equipment and transporting crops, the exchange said.

Diesel production has fallen in recent years as high taxes and price caps on the fuel have deterred investment in expanding output to meet growing demand, particularly from the farm sector. This has led oil-industry insiders to warn of shortages in the summer months of December to February as higher agriculture and tourism demand coincides with refinery shutdowns for regular maintenance.

The government reportedly is considering diesel-export restrictions to ensure domestic supply. Oil executives have said the only way to stave off a prolonged and sharp shortage would be with imports of the fuel.

The diesel shortage could reduce the "elevated yields" farmers have been achieving and hurt grain quality if it delays collection of crops beyond their optimal dates, the exchange said.

In many wheat areas, dry weather is needed to speed harvesting, and the "immediate normalization of fuel supply" is needed to avert "irreversible damages to crops," the exchange added.

Planted area totals 6.09 million hectares, and around 5.985 million of this will likely be harvested, according to the exchange. Last year, Argentina planted 5.83 million hectares and produced 13.7 million tons, according to the exchange.

The US Department of Agriculture has forecast Argentina's 2004-05 wheat output at 15 million tons.