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La Niña

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Crops in ArgentinaThere is recent indication that weather patterns stemming from “la niña” will be affecting negatively many argentine crops, namely soybeans and corn. Drought may extend to vast areas of the country and very likely estimated records crops for 2010/2011 at 100 million tons will not be achieved. Lack of rain has made farmers delay sowing numerous crops, in particular the ones mentioned earlier as dryness is affecting mostly the center region of the country. Nevertheless, the effects will not be as severe as those of 2008/2009 crop where output was 33% less than what was estimated at the time.

It is also estimated that most of Cuyo, the southern part of Cordoba and the west of Buenos Aires province will not be receiving rain for some time, as opposed to the NOA region, southeast of Buenos Aires and Chaco as well as north mesopotamia. These weather patterns are expected to stay in place till March and while yield would be reduced, farmers and agents might find compensation in the already higher grains prices which are in turn pricing potential argentine bad crops.

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Grains: getting closer to opening markets

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Ever since 2006, markets for wheat and corn in Argentina fell under the control of the government just like many other areas where the administration sought to expand power and control. This time, it was Guillermo Moreno -the “Secretario de Comercio Interior”- who devised the strategy to restrict exports so as to keep a lid on domestic food prices. Intervention is always bad, but for Argentina it is even worse when it comes to agricultural commodities given the weight they carry in relation to GDP figures.

As such, Argentina has been missing the train of international skyrocketing prices that would have greatly benefitted the sector. More recently, however, there has been talk of a partial opening of exports via the establishment of quotas. In a maneuver that can be seen as Julián Domínguez – the Minister of agriculture- gaining more influence within the administration while Moreno loses ground, Domínguez announced the possible establishment of export quotas in the amount of  18,5 million tons for wheat and 5,5  million tons for corn.

The news though, wasn’t received warmly. Some insiders to the farm industry instead of acknowledging this as progress have expressed their distrust to government measures that might keep affecting prices paid negatively as quotas would not nurture the needed competition that free markets offer and farmers can take advantage of. Still, there is a sense that with Domínguez there could be more dialogue than there ever was with Moreno.

And that can only be a good thing!

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