Argentine ambitions of record corn seem bleak as BAGE lowers output forecast

The Buenos Aires Grains Exchange adjusted its forecast for Argentina 2023-24 corn production down to 54 million mt, reducing the prospects of a record output from what market experts were anticipating to be a super campaign.

The reduction, announced on March 21, comes as an impact of the heat wave in Argentina during the month of February in the intermediate and late plantings, added to the increasing incidence and severity of spiroplasma kunkeii disease in the late plantings, "which will not allow achieving the production projection raised until last week."

BAGE had previously projected a record corn production at 56.5 million mt, compared with the drought-induced crop failure of 34 million mt in 2022-23.

Market experts see no respite or recovery to Argentina's corn campaign from here, which is anticipated to fall further.

"The numbers are moving further and further away from the initial predictions of 56.5 million mt, and now, with this new number, we are below the record crop of 2018-19 (55.5 million mt)," Geraldo Isoldi, independent commodities analyst told S&P Global Commodity Insights.

Most analysts no longer bet on numbers closer to 55 million, and the market is already pricing something closer to 53 million mt, Isoldi added.

During the start of the MY 2023-24, Argentina's promising corn campaign stood as the driver for global corn production outlooks, and in many cases, even raised the projections for world total grains output to record levels.

Although Argentina's production forecast still hints at a big output, offsetting losses of its competitor Brazil, there will be uncertainty around the true impact of its campaign for now.

Yield losses difficult to estimate

"I think we could have even lower final production; we are just beginning with early planted corn harvest and the main problem with spiroplasma disease is the difficulty to estimate lost yield. Some farmers expect a 20% loss, but with harvest progressing, they might find a loss of 80%," Paulina Lescano, commodities market analyst said.

Lescano anticipates an output near 52 million mt, "depending on the spiroplasma surprises."

Lower impact for price movements

"While it may not be a record, it is still an outstanding crop and will allow Argentine supplies to recover from their disastrous output from last year," Paul Hughes, chief agriculture economist at S&P Global said.

Thus, considering a promising corn output from South America, added to a weaker global demand, huge US final stocks, and a gradual recovery in Ukrainian supplies, "we will really need more impactful surprises for prices to react significantly," Isoldi said.

Platts, part of S&P Global Commodity Insights, assessed Argentina corn FOB Up River at $190.85/mt on March 21, up 30 cents/mt on the day.