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Argentine wheat supply hit by floods, cuts in planting

BUENOS AIRES -- Argentine wheat output will likely fall this season after record storms lashed the Pampas grains belt, making it difficult for Argentina to compete in a global export market saturated by bumper harvests in western Europe and the B...

Wheat
Soft red winter wheat has been hit hard by fusarium head blight this year. The fungus shrivels grain and reduces the average weights from harvest, cutting profits.

BUENOS AIRES -- Argentine wheat output will likely fall this season after record storms lashed the Pampas grains belt, making it difficult for Argentina to compete in a global export market saturated by bumper harvests in western Europe and the Black Sea region.

A key supplier of wheat to neighboring Brazil and the world's top exporter of soymeal livestock feed, Argentina is one of a handful of key international food suppliers at a time when both global demand and weather-related risks are rising.

Farmers expect a 6 percent loss in recently-sown wheat, after plantings were reduced in reaction to government export restrictions and a local currency widely considered over valued.

"We've already gotten a year's worth of rain and we're just headed into spring, which is supposed to be the wet season," said David Hughes, who farms several thousand hectares in the bread-basket province of Buenos Aires.

He usually gets 1,000 millimeters every year. "We passed that for 2015 about a week ago," Hughes said.

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Ernesto Ambrosetti, analyst at the Argentine Rural Society, which represents big growers, said a record 300 millimeters fell on some parts of the Pampas over the last 10 days.

"What's certain is that we will lose around 6.0 percent of wheat area to the floods," Ambrosetti said, not counting yield losses due to fungi that flourish in overly-wet conditions.

The Buenos Aires Grains Exchange expects 3.7 million hectares were planted with wheat this year, versus 4.4 million in the previous season.

Weak production could crimp Argentine exports to Brazil, prompting its largest wheat customer to turn elsewhere. When frost damaged Argentina's 2013 crop, U.S. exporters stepped in with 4 million tonnes of wheat, the most ever shipped from the United States to Brazil.

Storms, droughts and heat waves will cause more frequent food shortages as the global climate changes, British and American experts warned last week, throwing a question mark over top commodity crops corn, soybeans, wheat and rice.

Since most of these crops come from a small number of countries such as the United States, Argentina and China, extreme weather in these regions are expected to have an outsized impact on food supplies.

Global wheat stock piles are nonetheless seen hitting a record 221.5 million metric tons by the end of the season.

The U.S. Department of Agriculture expects an Argentine wheat crop of 11.1 million metric tons, down from 12.5 million in 2014/15. Some of Argentina's restrictive trade policies may change after the Oct. 25 presidential election, which could in turn increase wheat output the following season.

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Front-running presidential candidate Daniel Scioli has left his policy platform vague. He is from the same party as outgoing President Cristina Fernandez, whose interventions to keep the local peso strong have put exporters at a disadvantage.

Running second is Buenos Aires Mayor Mauricio Macri, who vows let the peso trade freely and ditch wheat export quotas if he wins the presidency. His goal in the October election is to do well enough to force a November run-off.

Related Topics: MARKETSCROPSWHEAT
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