Argentine corn, soy output to fall due to dryness, capital controls, exchange

BUENOS AIRES: Argentina's upcoming soy and corn crops will be smaller than last season's due to dry weather and capital controls that are eating into farmers' profits, the Buenos Aires Grains Exchange said in a teleconference with agricultural analysts on Wednesday.

Total grains production is set to fall 6.1% this year versus the previous season, the exchange said. Growers worry that a dry spell that started in June might get worse due to a mild episode of La Nina weather phenomenon while currency controls taken by the central bank to preserve its reserves take a toll on output from the world's No. 3 corn and soybean exporter.

Argentina's 2020/21 soy crop is estimated at 46.5 million tonnes versus 49.6 million tonnes harvested in the previous crop year, it said. Soy is the country's main cash crop. Planting of the oilseed starts next month in the Pampas grains belt.

Argentine growers were also expected to harvest 47 million tonnes of 2020/21 corn, down from 50 million tonnes collected in the 2019/20 season. Corn sowing in Argentina started in early September.

Central bank capital controls announced last week have widened the breach between the official and black market exchange rate. That gap plus export duties imposed this year mean growers will receive less for their crops.

"Therein lies the disincentive to production and investment, and that is why planted area will fall," said the exchange's chief economic Agustin Tejeda on the call.

The wheat harvest, set to start in December, is expected at 17.5 million tonnes, the exchange said, down from 21 million tonnes estimated in May as farms suffer from unusually dry weather. The wheat crop was 18.8 million tonnes last season, according to exchange data.

"The situation is critical" regarding 2020/21 wheat, said Esteban Copati, head crop analyst for the exchange.