US wheat group attacks 'short-sighted' Argentina

US wheat export promoters attacked Argentina's government for "short-sighted policies and misinformation", which they blamed for another weak harvest in the South American country, which could provoke export curbs.

US Wheat Associates said that Argentine officials were "missing the mark" with their policy of intervention in wheat markets, notably through tight control of exports, with the aim of ensuring domestic supplies of an important food grain.

"Government policies that control and restrict agricultural exports from Argentina aim to secure the domestic food supply but end up hurting Argentina's farmers by reducing their profit potential," US Wheat Associates market analyst Casey Chumrau said, flagging the resultant "disincentives" to sow wheat.

"With weather-related issues added to government intervention, Argentina has produced its smallest crops since 1995-96 the last two years.

"The prospect of an even smaller wheat crop has sparked speculation of further market intervention, which would compound the damage to Argentina's wheat farmers and their customers."

'No one wins'

The comments follow Argentina's release two weeks ago of a long-awaited wheat harvest estimate which came in at 8.5m tonnes, well below figures as high as 11m tonnes from other analysts.

"This is a dramatic decrease for a country that has produced an annual average of 14.6m tonnes over the last decade," Mr Chumrau said, adding that the "credibility" of the official estimate was also in question, given its departure from other forecasts.

The weak crop threatens another season of poor exports as historical customers such as Brazil, "have started to look elsewhere".

"When a government keeps changing the trade rules mid-game, no one wins.

"Transparency is necessary for any country that strives to be a reliable wheat supplier - an open market can easily adjust for annual fluctuations in production caused by weather, demand shifts or other naturally developing issues."

Out of favour

Argentine wheat area in 2012-13 fell to a 50-year low of 3.6m hectares, on US Department of Agriculture estimates, with only a small increase pencilled in for this season, as farmers switch to alternatives such as barley on which there are fewer export restrictions.

Wheat exports fell to 3.55m tonnes, the lowest since the 1970s.

For calendar 2013, Argentina's wheat shipments to Brazil, its top customer, have more than halved, with those to second-ranked Peru tumbling 83%, US Wheat Associates said.

The organisation, while seeing demand for US wheat boosted by weak Argentine supplies, is a strong proponent of free trade in grains.

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