Argy Wheat Crop Poses A Few Problems

The Buenos Aires Cereals Exchange say that this season's wheat crop will come in at just 7.1 MMT, even lower than the Rosario Grain Exchange's estimate of 7.4 MMT.

This is the first estimate of the season from the Buenos Aires Exchange, and pegs the crop around 15% lower than last season's 8.3 MMT.

It's no huge surprise with planted area the lowest in history, but it does pose a few interesting problems for the government.

With a domestic requirement of around 6.5-7.0 MMT, that doesn't leave a lot for export does it?

Back in the summer President Cristina Fernández de Kirchner struck a convoluted deal with wheat exporters to get them to buy a million tonnes of old crop wheat. In exchange they got guarantees that the government would issue export licenses for a million tonnes of wheat in the next 2009/10 marketing year.

This deal was an attempt to stimulate the spot market and encourage farmers to up their planting ideas for the current crop. It obviously failed, and now it looks like there isn't going to be a million tonnes to export.

It also throws into question the USDA's current crop estimate of 8 MMT and exports of 1.5 MMT.