Argentine wheat safe for now from late winter frost
A late-winter cold snap in Argentina raised concern about the country's recently sown wheat crop at a time of high world demand and soaring local prices, but local experts said on Monday that the low temperatures have done little or no damage.
The weather worries supported Chicago futures and came just as Argentina's northern neighbor and main wheat buyer, Brazil, said it will have a smaller-than-expected crop this year due to July frosts. World demand for wheat is solid this year due in part to steady demand from China.
Most local meteorologists and analysts said the Antarctic air that blasted Argentina over the weekend and early on Monday will not affect 2013/14 yields because it hit too early in the season for Argentine wheat plants to be vulnerable.
"The leaves on some of the more susceptible varieties (of wheat) may have suffered from the cold, but the plants themselves can recuperate," said Tomas Parenti, weather expert at the Rosario grains exchange
"The frosts could have done irreversible damage had the plants been in a more advanced and vulnerable growing stage when the temperature dropped," he added.
Chicago Board of Trade wheat futures rose more than 3 percent on Monday, the biggest one-day advance since April, on spillover strength from corn and soybeans, short-covering and worries about frost-bitten South American farms.
The South American grains powerhouse is expected to produce 12 million tonnes of wheat during the crop year, half of which is for export, according to the U.S. Department of Agriculture (USDA). Argentina is a major world supplier of wheat, corn, soybeans, soyoil and soymeal animal feed.
The Commodity Weather Group, a private U.S. forecaster, reported that temperatures fell to the upper teens to lower 20s Fahrenheit (minus 9 to minus 4 degrees Celsius) in 20 percent of the Argentine wheat belt, cold enough to damage crops in the early jointing stage.
But local growers and farm sector analysts said it was too soon after planting for any real damage to have been done.
"Frost can hurt wheat in Argentina when the plants are in their sprig-forming stage, starting around Sept. 15," said Pablo Adreani of the local Agripac consultancy. "Today's frosts cannot hurt potential yields very much because the plants are still in their vegetative stage."
"Until mid-September, frost is not a problem for Argentine wheat," said Gabriel Perez, analyst at the Mercampo consultancy.
The crop has just begun to cover parts of the Pampas grains belt with a carpet of green sprouts set to grow through the spring and be harvested in December and January, at the height of the Southern Hemisphere summer.
Between now and then, Argentina faces a wheat shortage that has prompted the government to adopt price controls to try to keep bread on consumers' tables ahead of October's mid-term congressional election.
Export limits meant to ensure ample domestic food supplies backfired this year as the government approved too much wheat for export based on optimistic early season crop estimates.
Interest in the upcoming crop is intense, as very little wheat remains in Argentina to be milled into flour for bread.
Voters, concerned about double digit inflation and other effects of President Cristina Fernandez's unorthodox economic policies, gave her a drubbing in this month's mid-term primary. Candidates sponsored by the 60-year-old two-term president got only 26 percent of the vote nationwide.