Argentina issues soy, wheat downgrades - but ups corn harvest

23.06.2017

Argentina cut its forecast for wheat sowings, citing area lost to excessive rains, in a report which also downgraded the ongoing soybean harvest, thanks to even bigger switch than had been thought to corn.

The country's farm ministry lowered by 100,000 hectares to 5.90m hectares its forecast for Argentine wheat sowings for the 2017-18 harvest, started late this year, noting "ups and downs" in the planting window, which has been marred in some areas by rain.

The downgrade reflected the "fact that in several areas, fields are not considered to be in a condition to be sown" for now", the ministry said, although the opportunity may yet arise for some seedings with wheat with a shorter growing period.

The revision takes the estimate for this year's sowings further below the 6.36m tonnes seeded last season, the most since 2001-02, and which brought the country a record harvest of 18.4m tonnes.

'Good planting pace'

The downgrade also brings the ministry's estimate closer to that from other commentators including the Buenos Aires grains exchange, which on Thursday restated a forecast of Argentina's wheat seedings ending up at 5.5m hectares.

While flagging flooding which had delayed seedings in areas including western Buenos Aires, La Pampa and southern Cуrdoba, the exchange said that a "good planting pace" in many other areas meant it was sticking with its area forecast.

Indeed, it estimated wheat sowings at 52.9% complete, up 16.3 points week on week, and 7 points ahead of the year-ago figure.

The US Department of Agriculture estimates Argentine wheat area in the new season at 5.60m hectares, on a harvested basis.

Soybeans vs corn

The Argentine ag ministry also lowered its forecast for the domestic soybean harvest, now nearly complete, by 1.0m tonnes to 57.0m tonnes, also reflecting a reduced estimate for sowings, which were cut by 700,000 hectares to a five-year low of 18.8m hectares

The ministry also cautioned of increase to the area of soybeans abandoned, after heavy rains earlier in the year, flagging an upgrade to the amount of corn lost too.

Nonetheless, with some of the downgrade to soybean seedings in fact reflecting a decision to sow corn instead, the ministry lifted its estimate for plantings of the grain by 520,000 hectares to 7.95m hectares.

That is the highest figure by more than 1.0m hectares on records going back to the 1960s, and reflects the improved economics for growing corn in Argentina after the Macri government ditched grain export taxes as one of its first moves after being elected in late 2015.

Corn production in 2016-17, including silage, was pegged at 47.5m tonnes, an upgrade of 1.0m tonnes, and a rise of 7.7m tonnes year on year, although the ministry did flag delays to the harvest both from rains and from a decision by producers to prioritise collecting soybeans.

The harvest estimate would trounce the current record of 39.8m tonnes set last season.


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