Argentina Wheat Situation Dire

Argentina, normally one of the world's top five wheat exporting nations, is in dire straits.

It's 2008 crop decimated by drought, slashed almost in half from 16 MMt to 8.3 MMT is about to begin planting its 2009 crop.

Drought, political strife and now the credit crunch are hitting Argentine farmers hard.

Gustavo Grobocopatel, president of the regional growing giant Grupo Los Grobo, said this week that at least a million acres less wheat will be planted this year. That represents a fall of more than 18% from the 5.4 million acres seeded in 2008.

With a domestic consumption of around 7 MMT of wheat per annum, any exportable surplus that Argentina had has already left the country. The government have put a stop on export licences, and with virtually no wheat left to sell Argentine farmers are getting the cold shoulder from their banks when they ask them for credit to begin to plant this years crop.

It's a potentially explosive cocktail, as without credit, fertiliser and pesticide applications will be the first to go out of the window, leaving the crop vulnerable to reduced yields in 2009.

And this is a situation that isn't just happening in Argentina. World hunger and people dying in bread queues was headline new just a year ago, and that was before we started cutting back on farm inputs. Throw lower plantings and a weather problem or two into the mix and things could look very different twelve months from now.