International Agriculture News

Drought cuts corn crop hopes for Argentina, but not South Africa

Dry weather has dented prospects for the corn harvest in Argentina, but not in South Africa, another significant southern hemisphere exporter, US officials said – proving sanguine on shipment prospects.

The US Department of Agriculture’s Buenos Aires bureau cut to 40.0m tonnes its forecast for Argentina’s 2017-18 corn production, citing “uncertainties” stemming from “very dry and hot weather”.

“Argentina has been suffering through dry and hot conditions since November,” said the bureau, whose downgrade took its production forecast 2.0m tonnes below the USDA’s official estimate, and follows a series of cuts by other commentators to Argentine harvest expectations.

The revision reflected a 100,000-hectare cut, to 5.1m hectares in the forecast for area harvested, and lower yield prospects too for much of what was cropped.

‘Converted into silage’

The weaker area forecast reflected in part concerns that the adverse weather would prevent some seedings.

“It remains a concern if and what area will finally be planted in Salta, Tucuman, Santiago del Estero and Chaco where more than 500,000 hectares are waiting to be sowed,” the bureau said.

However, it also flagged the loss of some of the early-seeded corn, sown before December, “which is normally planted in the better yielding areas and have the greatest productive potential”.

“Some fields sown for commercial corn were chopped and converted into silage for cattle feed.

And remaining early-seeded crop “will see yields negatively affected as most of it flowered during the very dry and extremely hot window of mid-December and early January”.

‘Struggling under a mid-summer drought’

In South Africa, the USDA’s Pretoria bureau also noted corn crop setbacks from a lack of rainfall, saying that “the western side of South Africa’s corn producing area is struggling under a mid-summer drought, resulting in low soil moisture.

“The drought had an impact on corn planting activities in the west with estimates that producers only planted about 70% of the intended corn area,” said the bureau, whose comments come ahead of South Africa’s first official sowings estimate expected on January 30.

However, the bureau kept at 12.0m tonnes its forecast for production – albeit a figure 500,000 tonnes below the USDA’s official estimate – saying that the crop “in the eastern side of the country is in a fairly good condition after good rainfall has been recorded between October and December”.

Furthermore, even for the drought-hit regions, it “is still early in the season and good rainfall during February and March will have a positive impact on corn yields”.

Rains in the forecast

The comments indeed come as rains are indeed in the forecast, with Wandile Sihlobo at industry group AgBiz saying that “forecasts for the next two weeks show a possibility of over 50mm of rainfall across the maize-growing areas of the country.

This follows rains too on Tuesday, when “parts of the South African maize belt received fairly good showers”, he said.

However, the region “will need more in order to improve soil moisture and benefit the new season crop”.

In Johannesburg, best-traded July futures in yellow maize, as used mainly in feed, rose by 1.1% to 2,032 rand a tonne on Thursday, but remained close to a contract low of 1,990 rand a tonne set on Monday.

July futures in white maize – a food staple, and grown largely in the drought-affected areas – gained 1.2% to 1,993 rand a tonne, in unusually large trading volumes, while staying not far from the contract low of 1,934.80 rand a tonne set last month.

Export prospects

The Pretoria bureau forecast that South Africa’s corn exports for 2017-18 (which actually starts in May this year) would reach 2.0m tonnes – 300,000 tonnes above the USDA’s official forecast, although below the 2.5m tonnes expected for 2016-17, following the latest bumper harvest.

The country will in 2017-18 draw “on a relatively large carry-over stock” from the previous season, the bureau said.

In Buenos Aires, USDA staff forecast Argentina’s corn exports in 2017-18, starting in March this year, at 29.0m tonnes, in line with the official USDA forecast, seeing the weaker production hopes reflected in smaller season-end inventories rather than in weaker trade volumes.