Trade fears grow as Argentina corn crop could fall below 30m mt

Market sources are bracing for further downward revisions in Argentina’s corn crop, with some now anticipating production could fall below 30 million mt, according to market sources.

“We need to see how low the Argentine crop can go, and what Brazil can give… the market is already talking 29-30 million mt and the next weeks are very dry,” one market source said.

With soybeans now approaching their typical harvest period, the corn crop is likely to be left in the field while farmers focus on bringing in the beans – potentially exposing the already battered crop to further damage.

That has prompted a fresh wave of downgrades, as the unrelenting dryness extends further into the year.

Crop estimates have spiralled down in recent weeks, with initial estimates putting the 2017/18 Argentina crop size at around 45 million mt, versus 41 million mt in the 2016/17 marketing year.

However, revisions have seen the overall crop sized cut by over 10 million mt since the start of the year, with most official sources putting the harvest at around 32 million mt, with soybean forecasts also tumbling.

Argentina’s 2016/17 soybean crop stood at 57.8 million mt, with the Buenos Aires Grains Exchange anticipating 39.5 million mt in the 2017/18 harvest.

“I think 30 to 32 million mt (of corn) won’t impact [trading activity] too much,” a second market source said, but if it dipped below the psychologically important 30 million mt, it “could have a bigger impact.”

So far, Argentina’s farmer selling is roughly on par with the previous harvest, with data from the government agriculture ministry showing total forward sales of 9.75 million mt as of March 22, versus 9.61 million mt in the same period of 2017.

However, both the volumes actually fixed and export licences issued are down versus the previous year, with 395,600 mt fixed and 3.9 million licences issued, versus 447,300 mt fixed and 4.2 million licences issued by March 2017.

Corn quality may also be an issue, with BAGE also forecasting corn production of 32 million mt and releasing data last week that put on average 59.5% of the national crop in a poor or very poor condition, with only 14.4% good or excellent.