Argy Drought Rages On

The drought in Argentina continues unabated with the Agricultural Secretariat saying that "soil moisture levels continue to be low or totally dry".

Argy farmers are expected to only plant 3.7 million hectares of wheat this season, down sharply from 4.6 million in 2008 and the lowest since records began in 1910.

But even that figure now looks in jeopardy, with the Buenos Aires Grain Exchange warning that wheat plantings were "dangerously delayed across much of the farm belt".

"The 3.7 million hectares seems to be a maximum ceiling for wheat area, and a greater reduction can't be ruled out if there aren't quick changes to the current weather and economic conditions," the exchange added.

Oil World see wheat plantings this year lower still at 3.6 million hectares.

Besides the weather punitive export taxes and other political disincentives, combined with a lack of credit are also responsible for the anticipated sharply lower planted area in 2009.

It's all gone Pete Tong for what was the world's fifth largest wheat exporter just a couple of years ago. Another wheat crop disaster this year would see Argentina faced with having to import wheat to meet it's own domestic requirements in 2009/10.

Further reading: Parched earth, empty barns