US Department of Agriculture staff in Buenos Aires have
lowered their outlook for Argentina's soybean and corn harvests, warning high
temperatures and a lack of rain have negatively impacted the crops.
"An unusual long period of very high temperatures
combined with scarce soil humidity in mid-December negatively affected almost
all early planted corn," the USDA bureau in Buenos Aires said.
The attaches cut their corn production estimate for the 2013-14
season by 1.2m tonnes to 23.8m tonnes.
The downgrade came despite rain relief for later planted
corn, which the USDA bureau said comprised some 50-55% of the crop
"This has been very good for late planted corn," the bureau
The bureau also lowered its projection for the Argentine
corn export surplus projection by 1.7m tonnes, reflecting the downgrade in
USDA pegged exports at 15.3m tonnes, a figure "below
the export quota of 16m tonnes announced by the government in mid-2013".
However, the impact of the weakening Argentine peso in
encouraging farmers to hold crops which are dollar denominated on international
markets was also highlighted.
"Producers are selling very little as they believe the
price of corn is very low and that there could be a larger devaluation in the
future which could benefit them," the bureau said.
"Trade in the Argentine Grain Exchanges declined last
week as farmers are holding onto stocks that they have on the farms, rather
than taking pesos, waiting to see how far the peso will fall".
Shipments to China are being constrained by fears that that
could suffer the rejections seen in cargos of US corn, on grounds of containing
a genetically modified variety not approved by Beijing.
"Exports of corn to China are expected to be minimal as most
traders are not willing to risk shipments being rejected as it happened
recently to the US."
The USDA bureau in Buenos Aires also lowered its soybean
production estimate to 54m tonnes, reflecting the poor condition of the second
"Where the rain hasn't reached is the western and
southern parts of the Buenos Aires province, where the majority of the second
crop soybean, planted after wheat and barley, is harvested," noted the
"Many contacts indicate that whatever was planted in
that region will not recover and some area was never planted to begin
The revision could add support to soybean prices ahead of
Mondays pending monthly Wasde report, which Don Roose, president of Iowa-based
broker US Commodities suggest "could show the tightest balance sheet in
history" for US soybeans.
The USDA bureau in Buenos Aires has however made a marginal
increase in its soybean export estimate in the 2013-14 harvest to 10m tonnes
from 9.8m tonnes.
'Could have been
In contrast Argentina
is expected to see a better year for its wheat and barley production.
The USDA bureau in Buenos Aires suggests the area for wheat
planting increased 200,000 hectares in 2013-14 to 3.7m.
"Planted area was higher than the previous year.
Producers stated that area could have been higher, but there was a lack of
available good quality seed, given the heavy rains during the final stages of harvesting
The attaches see exports running at a much slower pace than
"The government will not want to suffer the same stress
of the past crop in which local supplies were very tight and wheat, flour and
bread prices skyrocketed 2-3 months prior to the new crop began to come
in," they said.
As of January 22, exporters had purchased 1.4m tonnes of
wheat they noted. Significantly less
than the 4.8m tonne purchased a year ago.