Argentina Seeing Significant Decline in Corn Sowing for 2015/16

Despite a late rush in planting, Argentina is expected to see a sharp decline in corn sowing for 2015/16. In its first estimate, the country’s farm ministry forecasts corn planting at 5.3 million hectares – a 700,000 hectare drop from last year, and a four-year low.

The decline in planting is apparently being directed at corn destined for ‘commercial use’ rather than for livestock feed or silage.

Aside from Argentina’s ministry, others are also voicing estimates for lower sowing in the country. Corn and soybean analyst, Michael Cordonnier has forecast a decline of 12.5% in planting, and the U.S. Department of Agriculture (USDA) bureau in Buenos Aires stated that it expected to see wheat and corn acreage to be down by 1.5 million hectares for 2015/16.

Although the ministry did not comment on the possible drivers behind the lower sowing, it is generally understood that it could be a result of the country’s export regulations that boil down to lower prices for the country’s growers for their corn.

The USDA noted various drivers for the decline including delays by the Argentinian government in regard to issuing grain export licenses, high export taxes, and an air of uncertainty among growers surrounding possible policy changes that could result from the impending presidential elections.

In addition to announcing a drop in corn acreage, the farm ministry also increased its estimate for the country’s wheat plantings by 100,000 hectares to 4.1 million hectares, with harvest results in the north of the country indicating ‘acceptable’ yields, along with ‘low’ milling quality.

Argentina’s wheat crop is being closely monitored by Brazil, one of its biggest buyers. If quality ends up being below acceptable standards for Brazilian buyers, it could cause them to turn to North American wheat as an alternative.

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