Argentina uneasy over La Nina hit on crops
Buenos Aires (UPI) Jan 12, 2011
Argentina is feeling the effect of La Nina weather phenomenon on cash crops that are likely to have sharply lower yields because of low rainfall totals.
Corn and soybean prices rose in response to anxiety over a lack of rainfall that has prompted producer groups to lower yield forecasts.
Poor rainfall began worrying agriculture industry in December in response to La Nina diminishing rain over Argentina. U.S. and Latin American meteorological centers said drought conditions could deepen through the first quarter of 2011.
Officials said estimates for Argentine corn yields were already down from 25 million tons in December to 20 million tons and didn't rule out further downgrades as the dry season persisted.
Soybean crops were also affected by La Nina phenomenon, agriculture industry sources said.
The combination of poor rainfall totals and above average temperatures pose threats to corn pollination and soybean developing for a satisfactory harvest.
Amid forecasts of declining corn yields, prices rose 45 percent over last year, partly in response to growing demand.
The demand-supply deficit in global corn yields is already set to have grown to more than 17 million tons this year.
Industry analysts said Argentina's soybean harvest was also likely to drop because of La Nina. Argentina is the world's largest soybean producer after the United States and Brazil.
Meanwhile, United States agriculture estimates showed U.S. grain stockpiles could be the lowest in several years.
The U.S. Department of Agriculture is expected to show in its monthly crop report a further deterioration in supplies and also to issue its own estimates on the crop situation in Argentina and Australia, which is seeing flood conditions because of La Nina.
World grain markets are steadily on the rise, in response to bad weather conditions and rising demand. The U.N. Food and Agriculture Organization said international food prices topped the record set in 2008.
Forecasts for Australia's wheat crop are also expected to report lower yields as the country struggles with massive flooding. La Nina-related weather events earlier devastated large areas of Pakistan and caused widespread drought in the Black Sea wheat belt.
The drop in U.S. stockpiles is at least partly due to soaring Chinese demand for soybean.
Prices and supplies were also affected earlier by poor crop yields in Russia.
Officials said they hope higher grain prices would encourage farmers and agriculture industry at large to widen crop areas.
Analysts said there is optimism in the market over recovery in wheat production, partly due to the expansion of crops in the United States but corn and soybean yields still depend on the next direction of La Nina phenomenon.
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