Jan. 6 (Bloomberg) -- Argentina, Latin America’s biggest wheat producer, agreed to eliminate most export quotas after pressure from farmers who said that the system hinders sales, and a similar reform for corn shipments may follow.
The revised system will require about 7 million metric tons of wheat to be reserved for domestic supply and farmers will be allowed to export the remainder under certain conditions, Agriculture Minister Norberto Yauhar told reporters yesterday. Output from the current harvest, which is 93 percent complete, may be 13 million to 14 million tons, he said.
Farm groups have pressured President Cristina Fernandez de Kirchner’s government to remove the quota system, which has left producers with excess stock they can’t sell. Increased shipments from Argentina may swell global supplies and help to extend the grain’s 20 percent decline in Chicago over the past year.
Growers will now be able to export wheat crops “as they please” providing they meet conditions, such as being able to deliver the physical goods or holding certain futures contracts, Yauhar said in Buenos Aires.
Similar measures are likely to be taken for corn exports, Agriculture Undersecretary Oscar Solis said at the same media conference. No final decision has yet been made for corn shipments, according to Solis.
Wheat for March delivery fell 3.2 percent to $6.2925 a bushel on the Chicago Board of Trade yesterday, the most since Dec. 14. Corn and soybeans also dropped on speculation that rains will revive dry fields in South America, boosting prospects for global grain production.
Wheat growers may produce 2.9 percent more than forecast a week ago because of favorable weather, the Buenos Aires Cereals Exchange said yesterday. Output should reach 14 million tons, up from the 13.6 million ton week-earlier estimate.
A prolonged spell of dry, warm weather that has hurt the development of soybean and corn crops, is helping wheat growers harvest faster and avoid damage caused by moisture in silos. The drought came as soybean and corn crops were being planted and needed soil humidity to grow. The harm to soybean and corn crops also led farmers to focus more on wheat harvesting, avoiding losses, the exchange said.
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