Delayed Argentine corn crop to buoy world food prices
Flood-hit Argentina will harvest corn later than expected this season, supporting already-high world food prices as consumer nations are forced to rely longer on thin U.S. supplies.
Argentina is the No. 2 corn exporter after the United States, where the worst drought in decades trampled this year's crop. With food stocks hit by dry weather in breadbaskets Russia and Australia as well, importers are looking to South America.
But Argentine growers have said they will produce 20 percent less corn than initially forecast due to excessive August-October rains that turned prime Pampas farmland into unplantable mush.
The United States was already set to dominate the corn market through March, when the Argentine crop had been expected. With wide areas of the Pampas still waterlogged, it looks as if consumer nations will have to rely on U.S. supply until May or June, local growers and industry experts say.
Much of Argentina's 2012/13 corn will go into the ground in December, three months later than usual.
"May and June will be the peak harvesting months this season," said Martin Fraguio, executive director of Argentine corn industry chamber Maizar. "The total 2012/13 harvest looks like it will be somewhere between 25 and 28 million tonnes."
That will not come close to filling the gap left by a U.S. corn haul chopped by drought to 272 million tonnes, or about 100 million tonnes under early-season forecasts. The previous U.S. harvest was 323 million tonnes.
Chicago corn futures are up 16 percent this year as part of a global grains rally driven by low supplies.
Aside from raising fears that developing countries will not be able to afford basic staples, the rally is fueling inflation in advanced nations, making it harder for them to keep interest rates low enough to breathe air into their sluggish economies.
Pampas Rains Normalizing
The weather in Argentina has normalized over recent weeks and farmers hope their fields will dry out enough to let them seed genetically modified (GMO) corn designed to withstand the bugs that attack crops as the Southern Hemisphere summer gets under way in December.
The trend toward late sowing is here to stay, thanks to GMO technology and new tilling techniques that increase efficiency, said David Hughes, who manages 3,000 hectares (7,400 acres) in the key farm province of Buenos Aires.
"The futures market is telling us that buyers still expect most Argentine corn to come in March. But it's not going to be that way this year. My forward contracts are open into July because everything is delayed by the floods," Hughes said.