Argentine corn crop slammed by drought

Posted on January 16, 2014

BUENOS AIRES -- A three-week drought that parched Argentina’s Pampas farm belt in December is quietly wilting this year’s corn crop estimates for the South American grains powerhouse and will likely nudge world food prices higher.

Argentina’s corn production may be 10% less than in the last season as drought hits the world’s no. 3 corn supplier.
Local traders and analysts have cut their harvest estimates for this season to the 18-million to 25-million metric ton (MT) range, way under the prediction offered by the farm minister just a month ago of more than 32 million MT.

Plummeting forecasts in the world’s no. 3 corn supplier will likely support global prices after the US Department of Agriculture last week bucked trade expectations by cutting its forecast for US 2013/14 corn ending stocks.

Weeks of record heat took a toll on budding Argentine corn fields last month. Later-planted soy, Argentina’s main crop, was in earlier stages of development, shielding it from the irreversible hurt suffered by corn growing in adjacent fields.

“Corn yields will be 10% below those of last season,” said Buenos Aires-based weather expert Eduardo Sierra, who now sees an average yield of 6,600 kilograms per hectare.

“This would reduce total production in the current 2013/14 crop year to 19.8 million MT, which we can round up to 20 million MT,” he said.

Before last month’s hot, dry weather took its toll, Agriculture Minister Carlos Casamiquela said he expected the March through May harvest to exceed the 32.1 million MT collected in 2012/13. Yet as he spoke on Dec. 13, drought was taking hold of the Pampas.

The government has not issued an official 2013/14 corn harvest estimate. But, private analysts are growing pessimistic about the season’s output.

“At this point, we are looking at a total crop of only about 18 million MT,” said Buenos Aires-based agricultural economist Manuel Alvarado Ledesma.

“The worst damage done by the lack of rain in December was in the early-planted corn fields, which were in their flowering stage during the driest and hottest days,” Mr. Ledesma said. “The hard-hit areas were unfortunately in the heart of the corn belt, which is counted on to provide the most output.”

Corn was most damaged in the central part of Argentina’s bread-basket province of Buenos Aires, a local corn trader for a major international export company told Reuters.

Also hurt was southern and western Buenos Aires and southeast La Pampa province, said the trader, who asked not to be named.

“Corn was in its pollination stage when the heat wave hit these areas,” the trader said.

“Around 700,000 hectares have been heavily affected. So it’s difficult to see this year’s total harvest exceeding 20 million MT.”

January has seen a return of normal rain patterns on the Pampas, but by the end of December, the damage had been done.

The Rosario grains exchange sees 22 million MT of corn this season, and the latest forecast published by the US Department of Agriculture (USDA) sees a 25-million-MT Argentine harvest.

These and other forecasts may be cut as the South American summer wears on and damage from the December dry spell continues to be factored in.

“We expect average yields for corn to be down this year, as the record-high temperatures in December affected early planted corn,” said Melinda Sallyards, agricultural counselor at the US embassy in Buenos Aires.

“In addition, we expect record planted area for late corn, which normally yields less, further pushing down the average yield,” she said.

The next USDA South American forecast update is set to be published on Feb. 10. As of late last week, Argentine farmers had sown 82% of this year’s corn area and 86% of its soy, the government said. -- Reuters