Argentine farmers have halted 2011/12 corn planting due to dry soils, the Buenos Aires Grains Exchange said on Thursday, exacerbating worries that low supplies could fuel higher world grains prices in 2012. Dryness related to the La Nina phenomenon has become a growing concern in the South American grains exporting powerhouse Argentina, causing analysts to reduce their forecasts for the country's 2011/12 corn crop.
"La Nina is doing a lot of damage," said Buenos Aires-based agricultural economist Manuel Alvarado Ledesma. "This, plus -dryness in Brazil and Paraguay, could cause corn and soy price increases on a global level." Chicago Board of Trade corn futures ended lower on profit-taking on Thursday, following this week's rally to a six-week high on weather worries in South America.
Argentine growers have seeded 79.7 percent of the 3.74 million hectares estimated for planting with commercial-use corn, the exchange said in the report. "A good portion of the early-planted corn in the central part of the country is going through a critical stage of its development under adverse conditions, registering irreversible reductions in yields," it said.
The US Department of Agriculture (USDA) foresees an Argentine 2011/12 corn harvest of 29 million tonnes. But the country's fields have been dry for weeks and there is still no forecast for rain in key farming areas. "In my opinion, at this point it will be hard for Argentina's 2011/12 corn crop to come in a more than 23 million tonnes," said Alvarado Ledesma.
Argentina, with its ample water supplies and vast and fertile Pampas, is a natural grains producer. Investors however fret that the unorthodox and hard to predict policies of President Cristina Fernandez will leave the country vulnerable to fallout from the sluggish world economy in 2012, particularly if China, a key commodities client, slows down significantly.
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