Yields could be down 30 to 50 percent | U.S. Grains Council sees opportunities to increase corn exports as China, India increase demand
NASHVILLE, Tenn. — Corn markets could be in for a shock when the final production numbers come in from Argentina, according to the U.S. Grains Council.
“They are hurting bad,” said Terry Vinduska, past chair of the U.S. Grains Council.
“The loss is going to be much larger than the Argentina government is saying, and it’s also going to be larger than what USDA is projecting it to be.”
The U.S. Department of Agriculture is forecasting 22 million tonnes of production, down only slightly from last year’s 22.5 million tonne crop.
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The USDA number has dropped quite a bit since the department’s December estimate of 29 million tonnes, but it needs to be lowered further, said Vinduska.
He visited Argentina and Brazil in January and said there is no way the crop is similar in size to last year.
“The industry sources over there, the farmers and the grain people, say the loss is going to be more severe than what anybody is estimating,” he said.
Vinduska toured dry land cornfields during his trip and what he saw was grim.
“It’s as bad as they’re telling us. I farm in Kansas. Last year we had a terrible drought. Their corn looked like what my corn did last year,” he said.
“Some of their yields are going to be down 30 to 50 percent.”
Vinduska didn’t tour irrigated acres, but he was told those yields will be down as well because of extreme heat, although not as much as the dry land corn.
He heard estimates from people in the grain trade of a 10 to 30 percent reduction in production.
Argentina is the world’s second largest corn exporter so any shortfall in supply is bound to increase demand for U.S. corn and drive up corn prices, which will influence other grain and oilseed values.
Vinduska said the corn crop looked fabulous in central Brazil, but production could be down 10 to 15 percent in the south.
The U.S. corn industry has been losing market share to Brazil and Argentina. The USDA expects U.S. exports will be 43.2 million tonnes in 2011-12, or 46 percent of global sales, which would be the first time the U.S. has accounted for less than half of total world exports.
Vinduska isn’t overly concerned about the competition. The U.S. Grains Council firmly believes there will be increased corn demand from China and India in the coming years. Those two countries are looking for food security and they aren’t going to get that from Argentina.
The Argentine government has a stated goal of keeping every kernel of corn produced in the country for its expanding domestic livestock industry, although it will take a while to realize that objective.
“The U.S.’s ability to be a reliable supplier is going to increase our market share as we go forward,” said Vinduska.
