South America Calling

With the window for planting long-cycle wheat coming to a close, it is becoming obvious that farmers aren't going to plant as much of the cereal as many analysts expected.

Sharply rising costs and disappointing prices are the main reason area will fall, but poor soil moisture levels in large parts of the north, Santa Fe and Cordoba provinces are aggravating factors.

As a result, this week the Buenos Aires Cereals Exchange lowered its 2015 wheat forecast to 3.9 million hectares (9.6 million acres), down 1.5% on the year before.

Further south soil moisture remains good, allowing planting to move forward 13 percentage points to 35%, according to the exchange.

Much of the wheat already in the ground was planted as a cover crop, which means the level of technology employed is much reduced on last year. As a result, depending on the climate, it is possible a portion of the wheat crop won't even be harvested.

The most common reason for planting outside the traditional wheat-producing areas of the south is to control weed resistance and reduce the water table in areas where it has rained profusely.

The only region set to increase area is the northwest, where perfect rains have fallen, said the exchange.

Argentine farmers were on standby to plant more wheat this season on any indication that wheat export controls would be lifted or the Argentine peso would be devalued following October's presidential election. But with the result far from certain and local prices low, farmers are not taking a risk. In this context, the agriculture ministry's recent forecast, putting area stable with last year, appears wide of the mark.

All this means that Argentine wheat production will likely fall significantly from the 12 million metric tons produced last season.

(CZ)

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