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Argentina should issue its wheat harvest estimate, fast

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Argentina needs to come out with its wheat harvest forecast, fast, if it is to retain credibility in agricultural forecasts.

The market has come in with a wide range of estimates for the crop in the southern hemisphere's second-ranked exporter, after Australia, and a particularly key supplier to the neighbouring country of Brazil.

The United Nations Food and Agriculture Organization has the harvest at 8.8m tonnes while, at the upper end of expectations, the US Department of Agriculture pegs it at 11.0m tonnes.

The delay in Argentina's official estimate raises concerns that, when it finally emerges, the harvest figure may not add much to reliable knowledge.

Hanlon's Razor

Of course, Argentina's farm ministry did come out with its own forecast, of 8.8m tonnes, on October 17, only to withdraw it four days later as a "partial estimate".

There were then suspicions of political interference, in that a low forecast was interpreted by commentators as raising the risk of a wheat export ban by Argentina's habitually interventionist government – a move which would have risked a battle with farmers in the run-up to tricky mid-term elections.

But it appeared fair at the time, as one European commodities house proposed, to interpret the u-turn using Hanlon's Razor, which advises "never attribute to malice that which is adequately explained by stupidity".

Why the delay?

However, the failure still, more than a month later, to publish a corrected estimate has made such an interpretation look more than generous.

There appears no reason except gross inefficiency, or a quest for political input, for the ministry's failure since to issue a fresh forecast – either of which explanations questions the reliability any figure that may finally emerge.

By this time last year, Argentina had already issued an initial official wheat harvest estimate, and downgraded it.

Sure, Argentina has had the mid-term elections to deal with, and a government reshuffle which has appointed Carlos Casamiquela as agriculture minister.

But that is no justification for restraining so long official data which are of great importance for the world market, besides Argentine growers attempting to plan marketing strategies.

Bad example

The unreliability of Argentina's economic data has already got the country into trouble.

In February, Argentina became the first country to be censured by the International Monetary Fund, which threatened it with the suspension of borrowing rights, and potentially expulsion, if it did not publish "trustworthy and credible" numbers.

It would be a shame if the agriculture ministry were to follow the example of the country's official statistics office, Indec.

That would do a disservice to wheat buyers worldwide, by adding a risk premium to global prices,

And it would not necessarily benefit Argentina's farmers, who complain of being denied access to international market values by their government's knack for interference.

By Agrimoney.com

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