Argentine wheat crop dischord gets off to early start for 2017-18

31.05.2017
The – perennial – debate over Argentina's wheat harvest has started early for 2017-18, with an official forecast of a record 20m-tonne crop, before most of it has even been seeded, raising doubts among some observers.
 
Martin Moreno, chief forecaster at Argentina's agriculture ministry, on Monday said that the country's 2017-18 wheat crop (for which harvesting will start late this year) could hit an all-time high of 20m tonnes, in what would be a rise of 1.6m tonnes year on year, on official data.
 
The forecast came despite an expectation of lower sowings, which the ministry last week, in its first estimate for the newly-started planting period, saw falling 360,000 hectares to 16.00m hectares, reflecting what officials said was "some degree of uncertainty" among producers over the wet conditions in many areas.
 
However, Mr Moreno said that the high hopes for next season reflected expectations of boosts from new seed varieties, and fertilizer usage.
 
The forecast reflected "an increase in use of technology by farmers, and in increase in the quality of that technology".
 
'Incentives to step up production'
 
Commerzbank flagged the boost to Argentina's wheat output potential from the ditching of wheat export duties, and curbs, as one of the first acts by President Mauricio Macri following his election late in 2017.
 
"After several weak years, more wheat from Argentina is now reaching the world market again," the bank said.
 
"This creates incentives to step up production, both by expanding acreage and using better technology, fertilisers and seeds.
 
"It is now above all the increased investments in technology and operating equipment that look set to bear fruit."
 
Differing forecasts
 
However, the bank also highlighted that Mr Moreno's estimate is far bigger than that from other commentators.
 
The US Department of Agriculture pegs the harvest at 17.0m tonnes, and the International Grains Council at 16.5m tonnes.
 
And while the Buenos Aires grains exchange has yet to release a production forecast, its estimate for sowings of 5.50m hectares (of which 5.4% were seeded as of last week) is well below the ministry figure.
 
'Overestimated'
 
Indeed, Agritel said that the 20m-tonne figure looks "overestimated, especially after the excessive rains which penalised the start of planting works in Argentina".
 
At US broker Halo Commodity Company, Tregg Cronin said that "stories over the weekend actually make it sound as though as many as 2.5m hectares of wheat acreage could be at risk of flooding".
 
A European-based grain trader, with experience in South America, told Agrimoney.com that while a record crop was "possible, it does look unlikely, without weather being particularly kind to farmers from now on.
 
"You also have to remember that the weakness in the peso, which is helping Argentine exports, is not so helpful for imports" of the likes of crop inputs.
 
"So getting this boost from technology [Mr Moreno] is talking about may not be so easy."
 
The Argentine peso last week set a record low of 16.1775 to $1.
 
Perennial disagreement
 
In fact, Argentina's wheat harvest is the source of frequent divergence between commentators, with even estimates for the latest crop, long in the barn, diverging markedly.
 
While the Argentine farm ministry has it at 18.39m tonnes, the USDA puts it at 16.0m tonnes and the IGC at 17.6m tonnes.
 
However, with official production forecasts typically not issued until far later in the calendar year, the onset of dispute is particularly early this time.
 
 

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