Argentina’s corn and wheat shipments may prove stronger than previously thought – in part thanks to expectations that the end of Cristina Fernбndez de Kirchner’s time in power will spur an easing in export curbs.
The US Department of Agriculture’s Buenos Aires bureau said it was sticking with an estimate for Argentine wheat exports of 6.5m tonnes in 2014-15, on a December-to-November basis – 500,000 tonnes higher than the USDA’s official forecast.
For corn, the bureau pegged shipments in 2014-15, actually starting in March 2015, at 13.5m tonnes – 1.5m tonnes above the official forecast from the USDA, whose data are viewed by investors as setting benchmarks even on non-US crop statistics.
The bureau said that its greater optimism reflected ideas that the end of the presidency of Ms Fernбndez, who is barred by constitution from standing in this year’s elections, will usher in a more liberal grain export regime.
Currently, corn and wheat export volumes are regulated by government, which also collects taxes of 20% on corn shipments and 23% on wheat.
‘Significant policy change’
The bureau – noting that Argentina will hold its presidential primaries in August and elections in August, with the new administration effectively taking over in early December – flagged “great uncertainty” over policy.
However, talking particularly of wheat, it said that “most analysts expect significant policy change, which may facilitate an increase in exports”.
For corn, the bureau highlighted the potential for an uptick in shipments later in the marketing year, as expectations of policy reforms improve market conditions and encourage farmer selling.
“Many producers, that can financially wait, will probably delay some sales in the hope of better market signals that may accompany policy changes,” the bureau said in a report.
‘Very good weather’
The report also noted the potential boost to corn export volumes from the approval by Beijing of Syngenta’s MIR 162 genetically modified variety, blamed in part for a fall back to zero in Argentina’s nascent shipments of the grain to China.
Furthermore, the bureau estimated Argentine corn production at 22.5m tonnes, 500,000 tonnes above the official USDA forecast.
“Very good weather since the planting corn season began in September is making almost everyone expect very good yields,” the briefing said.
“There are some doubts on the impact of continued rainfall, as most weather forecasts predict lots of rain at least through February.
“However, generally robust rain during the corn season leads to increased production.”
The bureau kept at 12.5m tonnes its estimate for the Argentine wheat production – while acknowledging the “great disparity” between market forecasts, which range from 11.0m tonnes to the 13.9m tonnes at which the country’s farm ministry last week pegged the harvest.
“In general, yields have been higher than average, but somewhat lower than farmers’ earlier expectations due to late-season high temperatures in the centre of the country and excess rain in southern Buenos Aires province, which in some cases, resulted in acreage losses.”
Varied estimates over the extent of inundated land appears one reason for the array of harvest estimates.
“Depending on the source, these losses range between 130,000-260,000 hectares for the entire country,” the bureau said.
It added that “the quality of wheat is considered to be average”, although coming in “barely over minimum levels of protein and hectolitre weight”.