Hopes retreat for southern hemisphere wheat crop

November 21st, 2013

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Category: Grains, Oilseeds

(AgriMoney) – Hopes for southern hemisphere wheat output took a dent when the Rosario board of trade unveiled a lowball estimate for the Argentine harvest, amid growing concerns over Australia’s crop too.

The Bolsa de Commercio de Rosario pegged the ongoing wheat harvest in Argentina, the southern hemisphere’s second-ranked wheat exporter, at 9.1m tonnes, well below the 12m tonnes which the market had pencilled in earlier in the growing season.

Indeed, the figure is only 400,000 tonnes above the result from last year, when farmers switched en masse to barley, cutting wheat sowings to the lowest in decades, saying government restrictions on wheat exports which prevented them benefitting from higher international prices.

And it is only 300,000 tonnes above a controversial government estimate last month which was quickly withdrawn as based on “partial” information, having sent international markets soaring on the threat of low, or even banned, Argentine wheat exports.

The country is a key supplier to neighbouring Brazil, which has itself had a poor harvest but has, in the absence of competitively-priced Argentine supplies, turned to North America for its imports.

‘Decimated’

The board of trade, in a report, attributed its downbeat estimate to “the impact of dry weather” in the centre and north of the country, which had more than offset the boost from benign conditions further south.

Indeed, the estimate for sowings was cut by 260,000 hectares to 3.54m hectares

“The potential for wheat has been decimated in the north of the country,” the briefing said, saying that less than half of last year’s area was cultivated, and what was grown was set for yields of about 1.2 tonnes per hectare.

The lack of rainfall during September and, “critically”, October had particularly affected central and northern crops.

By contrast, in Buenos Aires, “very good conditions” meant the province should achieve an average yield of 3.25 tonnes per hectare.

Australia concerns

The comments come ahead of a fresh official estimate expected for Argentina’s crop later this week.

And they followed a fresh batch of concerns over the harvest in Australia, the southern hemisphere’s top producing and exporting country, where Australian Crop Forecasters trimmed its estimate for the harvest by 300,000 tonnes to 23.7m tonnes.

That followed a similar downgrade by National Australia Bank  last week, and represents a stark contrast to ideas of a harvest as high as 28m tonnes voiced by Louis Dreyfus only two weeks ago.

Quality is also seen as a little disappointing, with talk of a bigger-than-usual portion of small seeds, and some talk of depressed, if not dismal, protein levels.

‘Downgrade ahead’

Alison Watkins, chief executive of grain handler GrainCorp, said last week that “we expect the harvest [quality] to be revised down because of the frost damage” sustained in eastern states earlier in the growing season.

“To what extent is not yet clear,” she said.

Further west, unusually strong rains in Western Australia are viewed as a threat to wheat quality, often lowering gluten levels when arriving so late in crop development.

Australia is a major exporter to Asian buyers, such as China and Indonesia, and traders have already sold nearly half forecast shipments for 2013-14.

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