Analysts eye sub-19m mt Argentina wheat crop on dry weather

Private analysts are cutting their expectations of Argentina’s wheat crop this year to below 19 million mt, and in some cases 18 million mt, as adverse weather is set to hit yields.

The country, which is the world’s fifth largest wheat exporter after Russia, the EU, Canada and the Ukraine, had earlier this year been expected to produce 21 million mt, but frost and hail will hit yields in areas that had not suffered before.

Last week, Buenos Aires Grain Exchange (BAGE) and the Rosario Board of Trade (BCR) cut their estimates of output to 19.8 million mt and 20 million mt, respectively.

However, privately the trade is expecting bigger cuts.

Weather and crop forecaster Maxar said it now expects the crop to be 18.7 million mt, a figure that chimes with private trading house estimates.

And one trading house said that it expects output could fall as low as 18.2 million mt due to the weather - that would mark the lowest crop for three years.

“Talking with the grains desk here, the minimum they have heard for the moment was 18.5 million mt, and they consider that a really low number,” said one Buenos Aires-based brokerage.

Argentina is expected to use 6 million mt of wheat in the current marketing year, meaning any decrease in production will likely come from forecasted exports, which the USDA estimates at 14.5 million mt on a crop of 20.5 million mt.

But with dryness impacting normal fertile ground west of Buenos Aires, the amount of harvest acreage could also decrease alongside yield, BAGE said in a report last week.

“It looks like tomorrow there will be some showers, but it still looks like the heaviest rains will be to the east of the drier areas,” said Kyle Tapley, a meteorologist with Maxar.

“I don’t see anything that is going to dramatically change the picture over the next 15 days and ease the drought over south western Argentina.”