Dec. 12 (Bloomberg) -- Argentina’s first dust bowl in 85 years is reducing forecasts for wheat production, officials from the two largest cereals exchange said.
The Rosario and Buenos Aires cereals exchanges will cut their 2012-2013 wheat forecasts, today and tomorrow respectively, reducing estimates to below 10 million metric tons, said the officials, who asked not to be named because the new forecasts haven’t been made public. Exchanges in Rosario, Buenos Aires and Bahia Blanca previously said they expected the grain’s output to be 10.1 million tons.
The reductions come after an average of 25 percent of Argentina’s wheat crop has been harvested. Heavy rain in the country’s coastal area impeded planting and reduced yields on plant fungus from high humidity, the analysts said. At the same time, inland areas are experiencing a drought, they said.
“The main phenomenon we are facing now is the heating of the Atlantic Ocean, which is causing a lot of rain on the coast and severe drought in the countryside,” said Eduardo Sierra, who has been tracking Argentinas’s Pampas weather for the Buenos Aires Cereals Exchange for the last three decades. “The dust bowl has arrived and will be the future for most of the areas located 400 kilometers away from the coast.”
Grapes of Wrath
Sierra said this combination of weather conditions hasn’t been seen in the Americas since 1927, when it caused the 1929 stock market crash in the U.S. and the ensuing dust bowl featured in Nobel-prize winner John Steinbeck’s the Grapes of Wrath. Sierra spoke in a telephone interview from Buenos Aires.
“Argentine farmers are experiencing the same as U.S. farmers did in those days, extreme storms in port cities like New York, Buenos Aires and entire regions without a single drop of water,” he said.
In Argentina, this may last for a few years, Sierra said. On Dec. 6 Buenos Aires received 150 millimeters (5.9 inches) of rain in an hour when the monthly average is 125 millimeters.
Precipitation will continue near the coast in a way that won’t benefit crops, Jose Luis Aiello, a climatologist for the Rosario Cereals Exchange, said by telephone from Rosario.
“High volatility, intense rain in short periods, hot, in short: pretty much abnormal activity that will translate into extreme weather conditions for the crops,” Aiello said.
Conditions have damaged Argentina’s wheat crop, Aldana Ferradas, analyst for the Bahia Blanca Cereals Exchange, said in a telephone interview from Bahia Blanca, a port city surrounded by wheat and barley farms.
“The barley crop is far from the expected with low yields and a lot of illness,” she said. “The entire region west of Bahia Blanca has remained hot and windy, producing a low quality barley that won’t be accepted” by breweries or buyers such as Saudi Arabia, which uses it for camel food.
Bahia Blanca is maintaining its 10.1 million-ton forecast for the wheat crop, although it doesn’t rule out lowering that in the coming days, Ferradas said. “We have seen properties with losses close to 40 percent,” she said.
In June, the Agriculture Ministry increased wheat export quotas for the current crop on expectations for record output.
“Drought in the west, plus a lot of illness triggered by humidity fungus is destroying the crop,” said Maximiliano Zavala, an analyst at the Buenos Aires Cereals Exchange.
Argentina’s government officials last week reduced the wheat export quota by 25 percent to 4.5 million tons, an official from the grain export chamber said, who asked not to be identified before the government’s official announcement.
Argentina, the world’s fifth-biggest exporter of the grain, may cut the quota again to meet domestic demand estimated at 6.5 million tons, the grain export chamber official said. The Agriculture Ministry is forecasting a wheat crop of 11.5 million tons. Agriculture Secretary Oscar Solis didn’t reply to five telephone calls seeking comment.
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