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Argentina Agribusiness Report Q2 2010
Business Monitor International, March 2010, Pages: 61
Business Monitor International's Argentina Agribusiness service provides proprietary medium term price forecasts for key commodities, including corn, wheat, rice, sugar, cocoa, coffee, soy and milk; in addition to newly-researched competitive intelligence on leading agribusiness producers, traders and suppliers; in-depth analysis of latest industry developments; and essential industry context on Argentina's agribusiness service.
Argentinian grain production has been hit in recent years as crop failures, export restrictions and price controls have led farmers to turn to other crops, particularly soybean, encouraged by the high price for the oilseed over the past year as well as its hardiness. Poor rain through the southern winter months in mid- 2009 delayed planting for the 2009/10 harvest of Argentina's major grain crops of corn and wheat. However, abundant rains mean that grain production for the 2009/10 harvest promises to be greatly improved on 2008/09, despite the small acreage. In contrast to the drought that devastated Argentine crops during the last harvest, 2009/10 has seen above-average rainfall as the 'El Niño' weather pattern continued into January and February, rather than peaking around December as usual. The warm, wet conditions promise to bring a turnaround in the fortune of grain producers, as 2009/10 looks set to produce exceptional corn yields. As a result of the positive effects of rain on late crops and second crop production, corn yields are expected to reach 8.00 tonnes per hectare, up by 42.9% from 5.6 tonnes/ha in 2008/2009, and only marginally shy of the record yields of 8.04 tonnes/ha seen in 2006/07.
BMI have increased their forecast for corn production to 17.3mn tonnes, up 37.7% from 12.6mn tonnes in 2008/09, as warm, wet weather conditions promote increased yields. The increase came despite the fact that in 2009/10, the area dedicated to corn covered only 2.15mn ha, the smallest in 20 years, and down from 3.41mn ha in 2007/08, as farmers move over to hardier crops such as soybeans. They have raised also their forecasts for Argentinian sorghum production in 2009/10 and now forecast production of 3.85mn tonnes, up 131.8% on the drought-hit 2008/09 harvest.
In February 2010 Agriculture Minister Julián Domínguez approved the export of 10mn tonnes of corn and 1mn tonnes of wheat. The announcement came at a meeting of national and provincial governments with agricultural federations and local wheat producers in Entre Ríos in northeastern Argentina. The minister also reaffirmed the government's commitment to supporting small and medium-sized producers. BMI have raised their forecast for the 2009/10 Argentinian soybean harvest to a record 52.4mn tonnes, up 63.9% year-on-year on the drought-hit harvest of 2008/09. Abundant rainfall has promoted a bumper crop; however, the harvest has been threatened by a dramatic increase in fungal diseases and rot, due to the warm, humid conditions. Recent flooding also threatens to damage soybean production.
Declines in production of beef have led to steep price hikes since the beginning of 2010, with local media putting the rise in prices at butchers' counters at as much as 40-50%. The higher prices promise to lend some support to Argentina's beleaguered cattle farmers, but have led to outraged responses from the country's meat-loving public, for whom beef is rapidly becoming unaffordable. In an effort to control domestic prices, the government has slowed the issuance of beef export permits in an attempt to curb price rises, according to La Nación newspaper. The spectre of renewed government price controls also hovers over the country's beef producers amid concerns that the price surges for beef may spur faster inflation.
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