US farm officials, in a benchmark report, brushed aside worries from colleagues based in Buenos Aires to raise hopes for Argentina’s corn production to a level termed high by some other observers too.
The US Department of Agriculture, in its much-watched Wasde crop report on Wednesday, raised its estimate for Argentine corn output in the forthcoming 2015-16 harvest by 1.4m tonnes to 27.0m tonnes, matching the record high.
The upgrade reflected an increased estimate for sowings, upgraded by some 200,000 hectares to 3.4m hectares, on an expectation that the improved climate for agriculture ushered in by the government of Mauricio Macri, which took charge in December, had encouraged farmers to boost seedings.
“The larger corn area was encouraged by the elimination of taxes on corn exports in Argentina,” said Washington-based USDA analyst Denise McWilliams.
“The new policy, implemented in early December, has significantly improved corn profitability.”
‘Came too late’
But the upgrade ran counter to advice from the USDA’s bureau in Buenos Aires which said in a report dated last week, but published hours after the Wasde briefing, that corn area would remain below last season, when it reached 3.3m hectares on a harvested basis.
The Buenos Aires bureau acknowledged the improved appeal to farmers of planting the grain, after Mr Macri’s reforms “improved significantly corn returns, which went from negative to positive, and made corn profitability significantly higher than planting soybeans”.
However, it said that while these policy changes removed the possibility of a 20-40% drop in area, as analysts had earlier expected, “they came too late to fully offset the reduction”.
“Practically all analysts expect a drop in area from last year, ranging from 5-15%,” the bureau said.
The Buenos Aires grains exchange, for instance, has forecast plantings of 3.1m hectares, a drop of 300,000 acres on its estimates, while
‘Worst locust attack in 60 years’
The bureau pegged the forthcoming Argentina corn harvest at 24.0m tonnes – 3.0m tonnes below the USDA’s revised estimate.
Besides flagging a setback from a recent dry spell, the bureau also said that “an important factor to monitor is that Argentina is facing the worst locust attack in 60 years”, which Argentine officials are attacking through pesticide sprays.
“The goal is to control this plague rapidly before it turns into a flying throng which could then seriously affect crops and pastureland.”
The weaker production forecast fed into a lower export for the marketing year starting next month too, with the bureau pegging shipments at 14.2m tonnes, compared with a Wasde estimate upgraded by 1.0m tonnes to 17.0m tonnes.
The extent of the Wasde upgrade to Argentine corn production estimates raised doubts among some other commentators too.
Commerzbank noted that the Wasde’s crop hopes “exceed those of most other observers”, while Rabobank said that they “seem on the high side”.
However, 500,000-tonne upgrades in the Wasde to estimates for Argentina’s newly-finished wheat harvest, now seen at 11.0m tonnes, and 2015-16 export prospects, lifted to 6.5m tonnes, attracted less comment.
The bureau, whose estimates were the same as the Wasde figures, said that “despite a lower use of technology, especially fertilizers, very favourable weather in the last few months of the production cycle more than offset an earlier estimation of average or somewhat lower yields”.
But it underlined the “poorer-than-expected” quality of the crop, “with lower protein content than desired”, which will mean the country is a shipper of feed as well as milling wheat.
“Brokers indicate that there is a large volume of wheat below 10% of protein.”
(Source – http://www.agrimoney.com/news/us-officials-split-over-upbeat-estimate-for-argentine-corn—9285.html)