Argentine exchange trims wheat view

Argentina will seed 22 per cent less wheat this season than it did in the previous crop year, a key local exchange said Thursday, feeding a world rally in grains prices sparked by dry and hot U.S. farm weather.

Argentina is the world’s No. 6 wheat exporter and the top supplier to neighboring Brazil. With Chicago Board of Trade (CBOT) wheat futures already at four-year highs, a shortfall in global wheat seedings and output could boost prices further.

Growers in the South American country are expected to sow 3.6 million hectares (8.9 million acres) with 2012-13 wheat, the Buenos Aires Grains Exchange said, trimming its previous estimate by 100,000 hectares and warning of a 22 per cent slump from last season.

The forecast, made in the exchange’s weekly crop report, was in line with an estimate issued by the Rosario exchange on Wednesday and comes at a time of soaring world grains prices provoked by a drought in the U.S. farm belt.

The U.S. Department of Agriculture forecasts Argentine wheat production of 12 million tonnes in 2012-13, down from 14.5 million in the prior crop year.

Argentine wheat is planted from June through August, during the Southern Hemisphere winter, and is harvested from November through January.

But many farmers are shifting toward growing barley to avoid government-imposed wheat export limits. They say the curbs, meant to ensure ample domestic food supplies, hurt profits by reducing competition among buyers.

Over the last seven days, growers finished sowing fields in areas including north-central Cordoba province and north-central Santa Fe, the Buenos Aires exchange said.

"These areas have seen serious reductions in wheat planting this season," the report said. "These reductions are irreversible (for this crop year) because the recommended period for planting in these areas has passed."

The United Nations expects global food demand to double by 2050 as the world population hits nine billion.

Argentina, whose Pampas grains belt is bigger than France, will be key to feeding an increasingly hungry world despite the farm sector’s complaints about the state-centric policies of President Cristina Fernandez.

The sector is a key source of tax revenue as the government tries to dodge the financial fallout from Europe’s debt crisis and a slowdown in demand from its main trade partner, Brazil.

Argentina’s Agriculture Ministry held its outlook for 2012-13 wheat plantings at 3.8 million hectares on Thursday.

Soy, corn

Argentina is also the world’s No. 3 soybean exporter and No. 2 supplier of corn after the United States.

Early-season expectations for a bumper crop in the 2011/12 season were dashed by a drought that hit the Pampas in the December-January dog days of the Argentine summer, just as crops were entering their most delicate flowering stages.

Argentina’s 2011-12 corn output will be 21 million tonnes, the Agriculture Ministry said, up from its previous estimate of 20.1 million. The new forecast is still well under the 23 million tonnes of Argentine corn collected in 2010-11.

Expectations of thin Argentine harvests come as the U.S. dry spell pushes prices higher, stirring fears of another round of global food inflation.

In its monthly crop report, the ministry trimmed its soy outlook by 200,000 tonnes to 40.1 million tonnes.

The Buenos Aires exchange says Argentina’s 2011-12 corn crop should be 19.3 million tonnes. This year’s soy crop has been all but collected at 39.9 million tonnes, according to the exchange, marking a 20 per cent drop from the previous season.

— Hugh Bronstein is a Reuters correspondent in Argentina. Additional reporting for Reuters by Maximiliano Rizzi and Maximilian Heath.

Related story:
Argentina to approve more corn exports, July 16, 2012

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