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Jan. 19 (Bloomberg) -- While Argentina’s corn crop will decline because of a drought, curbing exports from the world’s second-largest shipper, U.S. farmers may expand planting and make up for the potential damage, the United Nations said.
The crop may drop to 21.4 million metric tons in the year starting in March from a record 23 million tons, said Liliana Balbi, an economist at the UN’s Food & Agriculture Organization who’s tracked food markets for 27 years. “Exports could decline in 2012-2013, but not dramatically,” Balbi said in a telephone interview from Rome yesterday.
Argentine Agriculture Minister Norberto Yauhar has declared a state of emergency in the provinces most affected by the dry weather, according to Hugo Biolcati, president of the country’s biggest farm group. The crop losses in Argentina won’t have a huge impact upon global output, according to Michael Pitts, commodity sales director at National Australia Bank Ltd.
“The U.S. has the bulk of the maize production and exports,” said Balbi, who leads a FAO team in charge of the early-warning system for food issues in Latin America, Asia, Europe and the Caribbean. “They can increase their next production to offset losses in Argentina.”
The U.S. grows about 39 percent of the global harvest and ships 46 percent of world exports, according to data compiled by Bloomberg. The forecast output in Argentina is about 8.3 percent of the U.S. harvest, U.S. Department of Agriculture data show.
Corn has dropped 7 percent in Chicago over the past year, while wheat has shed 25 percent and soybeans have dropped 16 percent. The March-delivery corn contract traded at $5.9675 per bushel at 12:51 p.m. in Singapore, 0.6 percent higher.
Global corn production will total a bigger-than-expected 868.06 million tons before this year’s northern hemisphere harvest, the USDA said on Jan. 12. That exceeds demand for the first time in three years as higher output in the U.S., Russia, Ukraine and Europe more than offsets Argentine losses, it said.
Argentina’s corn crop this season is still expected to remain within its historical average, Balbi said. While the FAO’s latest outlook for the South American nation is 4.6 million tons lower than that from the USDA, that additional potential damage is just 1.5 percent of the last harvest in the U.S. of 313.92 million tons, according to Bloomberg calculations.
The crop in Argentina that’s harvested from March is considered as part of the 2011-2012 marketing year under the outlook by the USDA, while the FAO counts it as the start of the 2012-2013 marketing year in its global supply estimates.
Argentina’s “severe” lack of rain over the last few weeks will lower the corn crop yield to about 6 tons per hectare (2.5 acres) from the 6.9 tons initially expected, the Rosario Cereals Exchange said in a Jan. 13 report.
The FAO’s harvest forecast matches the estimate by the Rosario exchange issued that day. Before the drought, the Argentine corn group Maizar had estimated in November that the harvest would reach 30 million tons.
--Editors: Jake Lloyd-Smith, Jarrett Banks
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