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Argentine Ag Production Projected Lower

Dry weather in Argentina is a concern now for wheat crop and for corn and beans

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Argentine Ag Production Projected Lower

  • The Buenos Aires Grains Exchange projects Argentina's total grains production is set to fall 6.1% this year versus last year.
  • Weather has been drier than normal since June and might continue due to a mild episode of the La Nina weather pattern.
  • Argentina’s central bank has also instituted currency controls to preserve its reserves.
  • The exchange forecasts the 2020/21 soy crop at 46.5 million tonnes versus 49.6 million in the previous year.
  • This year’s corn crop is projected at 47 million tonnes, down from 50 million tonnes last season.
  • BAGE also projects the next wheat crop will be lower at 17.5 million tonnes, down from 21 million forecast in May and 18.8 million last year.
  • In its last report, USDA projected soybean production at 49.7 million tonnes, corn at 50 million tonnes, and wheat at 20 million tonnes.

FBN’s Take On What It Means: The dry weather in Argentina is a concern now for the wheat crop and for corn and beans will depend on whether the current weak La Nina event becomes more severe as the season progresses. The Central bank capital controls announced last week having widened the difference between the official exchange rate and informal “blue dollar” rate. That gap plus export duties imposed this year mean producers will receive less for their crops, which in turn may reduce planted area this fall. It is very early in the season, but prices will likely be more sensitive due to increased world demand.

Ukraine Grain Exports Decrease

  • Ukraine has exported 10.77 million tonnes of grain since July, compared with 12.19 million tonnes at the same time last year.
  • The government has reported grain exports could decline to 47.4 million tonnes in 2020/21.
  • Season to date wheat sales are at 7.45 million tonnes, compared with 7.53 million tonnes at the same point of last season.
  • APK Inform projects wheat exports will decline 3 million tonnes from last year over the entire marketing year.
  • Current export volume is down largely because of a decline in corn sales to 619,000 tonnes versus 1.93 million tonnes last year.
  • Ukraine controls about 16% of global grain exports and sold 57.2 million tonnes of grain abroad in the 2019/20 season.
  • The economy ministry also projects the 2020 grain crop at 68 million tonnes, down from 2019's record of 75.1 million tonnes because of poor weather.
  • The Ukraine Hydrometeorological Center reported top-soil moisture was absent or near-absent across 60-70% of the winter planting area.

FBN’s Take On What It Means: Cumulative rainfall from August 1 to September 20 was as low as 10-30% of the average across most of Ukraine, raising concerns for germination in the western part of the country. Reduced production and resulting exports will need to be accounted for in world balance sheets going forward and we may see at least some of those sales shifted to the US, adding to increased demand and helping support prices.

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