Dry Argentine fields may favor planting soy instead of corn
Dry weather in Argentina is pushing farmers toward planting more soybeans as a lack of rain joins a long list of reasons not to sow corn in the South American grains powerhouse this year, according to crop experts.
The dry spell comes on top of soaring corn cultivation costs, swooning Chicago corn futures and government export curbs that distort both corn and wheat prices in Argentina.
Planting is set to start in about one week, but the dry conditions are raising questions about production just as Argentina emerges as a corn supplier to commodities-hungry China.
The first big cargo of Argentine corn arrived in China last month, establishing the South American country as a competitor for that booming market long dominated by the United States.
But with dry weather in Argentina's vast Pampas farm belt, where wheat was recently planted and corn is set go into the ground at mid month, growers must decide whether to risk lower corn yields by waiting for rain before planting or opt for cheaper and easier-to-grow soy.
Argentina is the world's No. 3 exporter of both crops.
"Corn has become riskier because of the lack of rain. This will push farmers toward planting soy instead," Buenos Aires-based agricultural economist Manuel Alvarado Ledesma said.
Forecasters say the corn belt in Buenos Aires, Cordoba and Santa Fe provinces should get moderate showers this weekend before normal rain patterns start forming toward the end of the month. Most of the area got no rain at all in August and the parts that did got 50 percent less than in August 2012.
"Climate models forecast good rains from early October till the end of February, benefiting middle and late corn and soybean plantings," said Eduardo Sierra, weather expert with the Buenos Aires Grains Exchange. Soy planting starts in November.
Rains over the days ahead could prompt some corn sowing. But farmer may nonetheless favor lower-risk soy, which is less sensitive to weather, cheaper to seed, and is exempt from government export curbs that apply to corn and wheat.
"If the rains are insufficient or do not come by the last week of September or early October, more fields will be dedicated to soy and only a portion to late-planted corn," the Rosario grains exchange said in a report on Friday.
The dry conditions also threaten wheat.
"Lack of rainfall in the agricultural heartland has started to deteriorate wheat crop conditions," the Agriculture Ministry said in its weekly report on Friday.
Inflation and financing costs have increased under President Cristina Fernandez, who was re-elected in 2011 on promises of increasing government's role in Latin America's No. 3 economy.