PRINTABLE VERSION   EMAIL TO A FRIEND   RSS FEEDS 16:06 UK, 7th Feb 2014, by James Moore
US officials downgrade Argentine soy, corn crops

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 said.

Lower exports

The bureau also lowered its projection for the Argentine corn export surplus projection by 1.7m tonnes, reflecting the downgrade in production.

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."

Soybean revision

The USDA bureau in Buenos Aires also lowered its soybean production estimate to 54m tonnes, reflecting the poor condition of the second crop.

 

 

 

"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 bureau. 

"Many contacts indicate that whatever was planted in that region will not recover and some area was never planted to begin with".

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 higher'

 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 last year."

The attaches see exports running at a much slower pace than normal.

"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.

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