Storms over the last week in Argentina's northern wheat-growing areas have bolstered yield expectations as the world looks to Southern Hemisphere exporters to fill the supply gap caused by a US drought that recently pushed grain prices to new highs.
The third grains surge in four years has sparked worries of a possible global nutrition crisis, putting the spotlight on producers such as Argentina, Brazil and Australia, which are in or entering their spring planting seasons for wheat, corn and soyabeans.
A dry winter and light sowing by farmers irked by government export curbs have brought Argentina's 2012/13 wheat output expectations to lows not seen in years. But the nearly constant rains that have lashed the northern Pampas farm belt over recent days have raised expectations for healthy yields in the areas that have been planted. Argentina - the world's No 1 soyameal and soyaoil exporter, No 2 corn supplier and No 6 exporter of wheat - hopes to benefit from rains associated with the El Nino phenomenon in the upcoming season. Wheat is already sown for the 2012/13 crop year. Corn will go into the ground in September, followed by soya in October.
"Showers around the city of Rafaela (in central Santa Fe province) oscillated between eight and 37 millimeters, which improved ground moisture conditions," the Agriculture Ministry said in its weekly crop progress report on Friday. "These rains have been very timely and beneficial for wheat, allowing fields to recuperate," it said. Santa Fe is Argentina's No 2 wheat producer after powerhouse grains province Buenos Aires, which also received ample rains this month. "Ground moisture is adequate in Marcos Juarez (in central eastern Cordoba province) after the rains that fell over the last week. Expectations remain for robust yields in this area," the report said.
Cordoba is Argentina's third biggest wheat producing province. The country is the main supplier of the grain to neighbouring Brazil, South America's biggest economy. But Argentina has trimmed its outlook for 2012/13 wheat area to 3.7 million hectares from a previous 3.82 million hectares, further dimming the crop's prospects. Grain markets have been shaken in the past two months by the worst drought in more than 50 years in the United States, which has ravaged crops in the world's biggest corn producer. Weather problems have sent prices to all-time highs along with fear of global food crisis such as the one in 2008, when surging prices sparked rioting in some countries.
More recently, food price inflation contributed to the Arab spring uprisings. Indeed, the Tunisian whose self-immolation triggered the first of the protests was a street food vender. US wheat futures rose for the third straight day on Friday, supported by worries about tight stocks.
Argentine growers meanwhile complain that government intervention in grains markets has slashed the profitability of wheat, pushing them toward cultivating more corn and soya. This season's wheat planting is expected to be under the 4.63 million hectares sown in the 2011/12 crop year, which produced 13.19 million tonnes. The US Department of Agriculture forecasts Argentina's 2012/13 wheat output will be 11.5 million tonnes.
The level of Argentine grains supply is of interest to exporters such as Cargill, Bunge and Noble, which have major operations in the country. The Argentine Agriculture Ministry sees the recently harvested 2011/12 soya crop at 40.1 million tonnes. It sees 2011/12 corn output at 21 million tonnes. The ministry says 2011/12 soya production fell 18 percent from the prior season, due to a drought that hit the Pampas in the December-January dog days of the Southern Hemisphere summer. Planting for the 2012/13 soya cycle will start in October.
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