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USDA GAIN: Oilseeds, Cotton, Sugar, Grain and Feed

02 November 2012

USDA GAIN: Argentina Grain and Feed Update November 2012USDA GAIN: Argentina Grain and Feed Update November 2012

Posts reduces wheat production for 2012-13 at 10.8 million tons as result of excessive spring rains. This reflects a drop of 0.7 million tons from USDA’s. Exports are adjusted downwards accordingly. Post projects barley production for 2012-13 at 5.7 million tons, 100,000 tons lower than USDA. Exports and domestic use are also slightly below USDA’s official number. Corn production for 2012-13 is forecast at 28 million tons, the same as USDA. However, there is still uncertainty of the final planted area (currently undergoing) primarily due to excessive rains and saturated soils. Post forecasts 1.0 million tons higher exports than USDA, adjusting ending stocks accordingly. Post increases sorghum planted area for 2012-13 by 100,000 hectares above USDA’s acreage, and production by 400,000 tons. Post’s exports and domestic consumption are higher than USDA’s.
USDA GAIN Report - Oilseeds, Cotton, Sugar, Grain and Feed

Wheat: Post forecasts production for 2012-13 to drop to 10.8 million tons, 0.7 million tons less than USDA’s official volume. Post’s harvested area continues to be below USDA’s. The past three months have been very rainy and humid, resulting in serious flooding in the center west of Buenos Aires province. In other provinces the excess rain caused some flooding, but primarily saturated soils. Wheat in these areas is generally in good conditions; however, the humid environment is encouraging the occurrence of diseases, which producers are treating the best way possible given the complicated situation of roads and soil conditions. If rain continues in the next few weeks, as several weather forecasts predict, we could see further quality and yield damage.

Production in the key region of the southeast and southwest of Buenos Aires province is in good condition. Post’s export number is also lower by 0.7 million tons than USDA’s projected volume, as a result of anticipated lower output. Despite the government opening a 6 million ton export quota for crop 2012-13, it is unlikely that it will be fulfilled. Most local traders believe that there will be less exports of wheat and flour, which combined would total approximately 4.8 million tons. Post’s beginning and ending stocks for crop 2012-13 are 0.5 million tons lower than USDA’s. Most players in the market indicate that stocks are currently extremely tight. However, production of the new crop is already coming in as the harvest is at full swing in the northern part of the country. By the beginning of the 2012-13 crop season (December 2012), there will be about 2.5-3.0 million tons of new crop already harvested.

Post’s production for crop 2011-12 is at 15.1 million tons, 0.4 million tons lower than USDA’s number. Post’s ending stocks are also lower, reflecting a smaller output and what is perceived in the local market. Exports for crop 2011-12 had to be adjusted upwards several times, reflecting higher than expected wheat stocks. Traders estimate that exports of “current crop” in November 2012 could range between 100-150,000 tons of wheat and 100,000 tons of flour (wheat equivalent).

Barley: Post’s production for 2012-13 is now at 5.7 million tons, higher than our previous estimate, but marginally lower than USDA’s number. Extremely wet weather in the past several months and the possibility of a continuation of this pattern is expected to affect yields somewhat. Because of lower supplies available, Post also forecasts smaller exports than USDA’s official numbers. Post continues to estimate a higher production for crop 2011-12 than USDA’s, and higher exports, at 3.5 million tons (2.0 million tons of feed barley and 1.5 million tons of malt barley). Domestic consumption is also higher than USDA’s official number as the local malting sector operated at full capacity.

Corn: Post forecasts harvested area for crop 2012-13 at 3.7 million hectares, 100,000 hectares lower than USDA. We are in the middle of the planting season and there is still much uncertainty of what the final area will be. Most contacts estimate that the drop in planted area will finally range between 5-10 percent from last year’s (harvested area was significantly lower as result of the losses due to a severe drought). Planting intentions have come up significantly in the past four months as result of stronger world prices. In most cases, Buenos Airescorn returns are higher than soybean’s, but the investment needed is roughly 70 percent more than to produce soybeans. Many farmers and large companies (locally called “pooles”) had negative result in the past season due to the severe drought which affected the corn and soybean crops. Therefore, due to their financial situation many will prefer to plant the less expensive soybean (this is especially true in the local corn core area, where corn planting intentions are forecast to drop 15 percent from last year). Although planting is delayed on account of the very wet spring, the amount of water in the soil is likely to guarantee a very good crop. Most players are expecting higher-than-normal yields. Post raises production at 28 million tons, in line with USDA, while local estimations range between 25-30 million tons. Post’s export forecast is at 19.5 million tons, 1 million tons higher than USDA as Post projects a smaller ending stock.

Sorghum: Post raises production for crop 2012-13 at 5.2 million tons, 400,000 tons higher than USDA. Last year’s good development, significantly lower production costs than corn, and good export and domestic demand are expected to push area up by 100,000 hectares from USDA’s acreage. Post also expects an increase in exports by 200,000 tons as the additional output will more than offset a slight increase in domestic use and ending stocks. Post raises sorghum production for 2011-12 by 200,000 tons higher than USDA’s as result of higher yields. The additional production is expected to go to higher exports, now at 2.2 million tons, and a larger domestic demand.

Rice: Post’s production for crop 2012-13 is practically the same as USDA’s. Harvested area is at 210,000 hectares, slightly above USDA’s. Planting in Corrientes province is practically finished and water reservoirs are filled due to generous spring rains. However, planted area in Entre Rios is delayed because saturated soils and the bad condition of roads have complicated the access and work in the fields. We could see a smaller planted area in Entre Rios, but it would be offset by a slightly bigger area in Corrientes province. Beginning stocks for crop 2012-13 are lower than USDA’s as result of higher exports in crop 2011-12, now at 700,000 tons, 50,000 tons higher than USDA’s official number. Brazil is actively buying product in the country and recently a boatload was exported to Iran. Rumors indicate that an additional boat to Iran is intended to follow, but traders are finding difficulties to source 30,000 tons of rice for export. Most mills have stocks just to operate until the new crop begins in early February.

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