U.S. Officials Warn Argentina’s Corn Exports Could Fall by a Third Next Season
Despite the country’s 2014/2015 corn crop exceeding expectations, U.S. officials are warning that Argentina’s corn exports could fall by a third next season due to lower sowing rates undermined by poor financial conditions.
The U.S. Department of Agriculture’s (USDA) Buenos Aires bureau has noted many contributing negative economic factors including ‘high local inflation’, high production costs, high export taxes, ‘extremely high’ freight and transportation costs, low global grain prices, high interest rates, and the inability to gain credit that will hamper next season’s sowing expected to begin next month.
Although these conditions will negatively affect the production of all crops, corn will be affected more than others due to its high demand for inputs including fertilizer, and the government’s control over exports which has domestically devalued the crop compared to international values.
Adding to the economic instability is the uncertainty that is surrounding the country’s upcoming presidential elections in October. The bureau has stated that although the leading candidates have claimed they plan to eliminate export restrictions and reduce taxes, it is still unclear if any of these changes will be implemented when the new administration takes office in December when sowing of the 2015/2016 crop should be finishing.
If existing policies remain in place, the bureau forecasts that sowing will decline by 15% to 2.8 million hectares, with output falling by 21% to 21 million tons – well below the official USDA forecast of 25 million tons. Exports for the season beginning March 2016 are expected to fall to an 11 year low of 11.5 million tons – a 32% drop year on year.