Grain and Feed Update 2012

An Expert's View about Crops and Support Services in Argentina

Posted on: 15 Feb 2012

A severe drought and high temperature during the flowering stage has irreversibly damaged early plantations.

THIS REPORT CONTAINS ASSESSMENTS OF COMMODITY AND TRADE ISSUES MADE BY USDA STAFF AND NOT NECESSARILY STATEMENTS OF OFFICIAL U.S. GOVERNMENT POLICY Required Report - public distribution Date: 1/30/2012 GAIN Report Number: Argentina Grain and Feed Update 2012 Approved By: Melinda Sallyards Prepared By: Ken Joseph Report Highlights: Post estimates Argentine corn production to drop to 21.8 million metric tons (MMT), significantly lower than USDA’s number at 26.0 MMT. A severe drought and high temperature during the flowering stage has irreversibly damaged early plantations. Almost all the corn area was affected, including core production areas in Buenos Aires, Santa Fe and Cordoba. The final output will depend on the rainfall from now onwards, which will determine the production of late planted corn. Exports are projected down at 14.0 MMT, 4.5 MMT lower than USDA. Wheat production for MY2011/12 is estimated at 14.0 MMT and exports at 9.5 MMT, higher than USDA, as ending stocks are expected to decrease as a result of the possible implementation of a new government commercialization scheme. Barley production for MY2011/12 is at 3.9 MMT. Sorghum production is at 4.0 MMT, 700,000 MT lower than USDA’s number due to the drought. Post: Buenos Aires Author Defined: Wheat: Post is estimating for MY2011/12 a wheat harvest of 4.6 million hectares, 400,000 hectares lower then USDA’s number. As a result, production is also lower at 14.0 million metric tons (MMT). Post’s export projection for MY2011/12 is at 9.5 million metric tons, one million more than USDA’s volume because a significant difference in ending stocks. After several years of significant stocks rolling into the next season because of government controls on exports which negatively affected farmer prices, the government has recently announced that it will introduce some modifications beginning next month. Although still not in operation, the new system basically consists in estimating the crop production volume, subtracting 7 million metric tons to secure the needs for the domestic market (including wheat flour production for exports) and liberating the balance for export without quotas. If this system is implemented and works smoothly, we anticipate a significant reduction in ending stocks. Most players in the sector would prefer a totally free market, but indicate that it is better that the one currently implemented. Barley: Production for crop 2011/12 is estimated 3.9 MMT, on approximately 1 million hectares. Yields were again high as a result of abundant rain during August-November and good temperatures. Producers continue to explore this alternative as wheat has severe difficulties in its commercialization. Yields are very good and the harvest is finished two weeks earlier permitting producers to plant second crop soybeans. Barley exports in CY2011 were approximately 1.8 MMT, the highest in the past 10 years. Main markets were Saudi Arabia for feed, and Brazil and China for malt. Corn: Production for crop 2011/12 is estimated down significantly at 21.8 million metric tons, considerably lower than USDA’s number and our previous estimate. There is a wide range of production estimates, from 17- 23 MMT. After a dry winter, plentiful rain in October and November covered most grain production area. Crops, primarily corn, were in very good condition. However, extremely dry conditions and very high temperatures during December and the first half of January 2012, coinciding with the key period of corn flowering, has diminished production drastically. The most affected areas are Cordoba province, Northwest Buenos Aires and the key “corn belt” area of Southern Santa Fe and Northern Buenos Aires province. In most of Argentina all plantations are somehow affected, but in the central area of the country there are many plantations which were completely lost. Some producers cut them for silage, others have turned cattle out for grazing and others have left them or sown soybeans with a significant risk. Thanks to the new seed technology, planting late corn is gaining in popularity as it skips flowering during the usually hot, dry period of mid- December mid- January. Some 25-35 percent of the corn crop is late planting and has the potential for a good harvest as long as rains, which began again in mid January, continue throughout its crop cycle. Early corn, planted in September to early October has practically no chance of recovery. Post’s harvested area is 200,000 hectares lower than USDA’s number. Although too early to estimate, there will be some area not sown due to the lack of soil moisture and several thousand hectares, planted originally for grain production, which will not be harvested. We expect somewhat higher domestic corn consumption as the livestock sector was not able to produce the planned volume of reserves of pastures and grain silage. Argentine corn exports in 2011/12 will drop to 14.0 MMT. Shipments are expected to be 1.5 million metric tons lower than 2010/11. The government has announced that for corn it will also implement a similar commercialization scheme as in wheat. After estimating the crop season production (in February-March of each year) it will subtract 8 MMT for the domestic market and then liberate the balance for exports, without quota limitations. Argentine corn exports to China are still banned, however, the governments continue to work on solving final differences. Most traders believe that China wants to have an alternative supplier to US corn and that the ban could be lifted any time during this year. Sorghum: Post estimates Argentine sorghum production at 4.0 MMT, 700,000 MT lower than USDA. Although more tolerant to drought than corn, yields are also expected to be negatively affected by the lack of good rainfall and extremely high temperatures during December and the first half of January. Lower production is expected to force exports down to approximately 2.0 MMT, 200,000 MT lower than USDA’s estimate. Ending stocks would also be negatively affected, at nearly 300,000 MT. Rice: No major changes to current numbers. The harvest began in the Northern part of Corrientes province, with yields between 7.0-7.5 tons per hectare. In most parts of Corrientes the crop is in good condition except for roughly 5 percent of the area which had some problems of irrigation due to the drought. Harvest in Entre Rios will begin in mid-February, with 10-15 percent of the plantations in bad or regular condition. Wheat A 2009/2010 2010/2011 2011/2012 rgentina Market Year Begin: Dec Market Year Begin: Dec Market Year Begin: May 2009 2010 2011 USDA DA USDA O New P US ost fficial O New Post fficial O New Post fficial Area Harvested 4,000 4,000 4,600 4,600 5,000 4,600 Beginning Stocks 1,285 1,285 2,364 2,364 3,094 2,758 Production 12,000 12,000 16,100 15,800 14,500 14,000 MY Imports 3 3 5 4 5 5 TY Imports 3 3 5 4 5 5 TY Imp. from U.S. 0 0 0 0 0 0 Total Supply 13,288 13,288 18,469 18,168 17,599 16,763 MY Exports 5,099 5,099 9,500 9,495 8,500 9,500 TY Exports 5,172 5,172 7,738 7,738 9,200 10,200 Feed and Residual 25 25 25 25 25 25 FSI Consumption 5,800 5,800 5,850 5,890 5,900 5,925 Total Consumption 5,825 5,825 5,875 5,915 5,925 5,950 Ending Stocks 2,364 2,364 3,094 2,758 3,174 1,313 Total Distribution 13,288 13,288 18,469 18,168 17,599 16,763 Not Official USDA Data Corn A 2009/2010 2010/2011 2011/2012 rgentina Market Year Begin: Mar Market Year Begin: Mar Market Year Begin: Mar 2010 2011 2013 USDA USDA DA O New Post fficial O New P US ost fficial O New Post fficial Area Harvested 2,750 2,700 3,600 3,500 3,800 3,600 Beginning Stocks 976 992 879 895 1,289 900 Production 23,300 23,300 22,500 22,800 26,000 21,800 MY Imports 7 7 10 5 10 6 TY Imports 4 7 7 5 10 6 TY Imp. from U.S. 1 1 1 1 0 1 Total Supply 24,283 24,299 23,389 23,700 27,299 22,706 MY Exports 16,504 16,504 15,000 15,500 18,500 14,000 TY Exports 16,971 16,973 15,159 15,600 17,500 13,000 Feed and Residual 5,000 5,000 5,100 5,300 5,300 5,600 FSI Consumption 1,900 1,900 2,000 2,000 2,100 2,100 Total Consumption 6,900 6,900 7,100 7,300 7,400 7,700 Ending Stocks 879 895 1,289 900 1,399 1,006 Total Distribution 24,283 24,299 23,389 23,700 27,299 22,706 Not Official USDA Data Sorghum A 2009/2010 2010/2011 2011/2012 rgentina Market Year Begin: Mar Market Year Begin: Mar Market Year Begin: Mar 2010 2011 2012 USDA New USDA New USDA New Official Post Official Post Official Post Area Harvested 751 800 1,000 950 1,000 1,000 Beginning Stocks 194 194 152 149 552 599 Production 3,629 3,629 4,400 4,400 4,700 4,000 MY Imports 0 1 0 0 0 0 TY Imports 0 0 0 0 0 0 TY Imp. from U.S. 0 0 0 0 0 0 Total Supply 3,823 3,824 4,552 4,549 5,252 4,599 MY Exports 1,771 1,775 1,900 1,750 2,200 2,000 TY Exports 1,507 1,509 1,866 1,700 2,300 2,100 Feed and Residual 1,700 1,700 1,900 2,000 2,100 2,100 FSI Consumption 200 200 200 200 200 200 Total Consumption 1,900 1,900 2,100 2,200 2,300 2,300 Ending Stocks 152 149 552 599 752 299 Total Distribution 3,823 3,824 4,552 4,549 5,252 4,599 Not Official USDA Data Rice, Milled A 2009/2010 2010/2011 2011/2012 rgentina Market Year Begin: Apr Market Year Begin: Apr Market Year Begin: Apr 2010 2011 2012 USDA New USDA New USDA New Official Post Official Post Official Post Area Harvested 215 215 257 257 240 235 Beginning Stocks 120 120 75 75 221 221 Milled Production 706 706 1,136 1,118 1,014 975 Rough Production 1,086 1,086 1,748 1,720 1,560 1,500 Milling Rate (.9999) 6,500 6,500 6,500 6,500 6,500 6,500 MY Imports 7 7 5 8 5 8 TY Imports 7 7 5 5 5 7 TY Imp. from U.S. 0 0 0 0 0 0 Total Supply 833 833 1,216 1,201 1,240 1,204 MY Exports 488 488 645 630 650 620 TY Exports 468 468 630 615 650 620 Consumption and Residual 270 270 350 350 355 360 Ending Stocks 75 75 221 221 235 224 Total Distribution 833 833 1,216 1,201 1,240 1,204 Not Official USDA Data
Posted: 15 February 2012

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