Report Highlights:

Post continues to project the 2015/16 wheat crop at 10.2 million metric tons (mmt), slightly below USDA's official number. Lower exports for 2014/15, are now revised down to 5.0 million tons (adding wheat and flour), and a smaller ending stock in 2015/16 would result in increased exports at 6.0 mmt, 1.0 mmt higher than USDA. Barley exports in 2015/16 are revised down at 1.8 mmt, 200,000 tons lower than USDA. 2015/16 corn area and production remain the big question, but Post maintains its previous forecast at 21.0 mmt, 3.0 mmt lower than USDA. Sorghum PSD remains practically unchanged, except for a 10 percent reduction in USDA's 2014/15 export to 1.0 mmt. Argentine rice production for 2014/15 is adjusted upwards to 1.49 mmt, but still somewhat lower than USDA.

Background:As in the past update (July 2015), farmers continue to suffer uncertainty on some key factors which could impact their business in the near future. After the presidential elections of October 25, the two most popular candidates will head to a runoff election next November 22, taking office whoever wins on December 10, 2015. Both candidates have expressed (in different ways) that they would eventually work on policies to improve the competiveness of the local agricultural sector to encourage farmers to produce more. Most analysts believe that the ROE system, by which exports of corn and wheat are controlled, would be eliminated, as well as the export taxes in most grains (exports of corn are currently taxed 20 percent and wheat exports 23 percent). Many local economists also indicate that the local currency needs to be adjusted to become more competitive. If these adjustments/changes in policy take place, the low or in some cases negative returns which farmers currently face would improve significantly. However, it remains a big question how fast a newly elected President will be able to implement changes and how will it impact on farmers' decision for the summer crop season. The 2015/16 crop season for winter crops (mainly wheat and barley) is already in the ground (in fact wheat harvest began in the Northern provinces). Until a few weeks ago, most farmers' planting decisions were very pessimistic for corn and practically neutral or barely optimistic for soybeans. Early corn planting in the local Corn Belt is practically over, showing a significant contraction from last year. Moving forward, based on expectations and whatever political signals farmers receive, there is room for second crop or delayed planted corn area to expand somewhat over current planting intentions. December is when most of the late corn is planted in the main production area.

Wheat: Post expects wheat production at 10.2 million metric tons (mmt), 300,000 tons lower than USDA's official number. Post continues to estimate harvested area at 3.7 million hectares, 200,000 hectares more than USDA. Although there was a loss of approximately 70-100,000 hectares of wheat due to excess rain during last August in the north eastern part of Buenos Aires province and southern Santa Fe, several sources indicate that there is a larger-than-expected wheat area in the province of Cordoba. Also Post expects a smaller yield than USDA as the technology (seed quality, level of fertilization and crop protection) used in the crop has been lower than in previous crops and to the fact that many producers have shifted from higher yielding varieties to better quality wheat varieties which normally yield less.

Exports in of the 2015/16 crop (through November 2016) are projected at 6.0 mmt, 1.0 mmt higher than USDA. This is a result of a larger beginning stock from the previous crop of 500,000 tons and the potential for removal of export restrictions for the 2015/16 crop. Exports in 2014/15 are forecast at 5.0 mmt, 500,000 tons lower than USDA. For this crop, the government has so far announced an export quota of 4.4 mmt of wheat (of which 0.4 million tons are form the previous crop season) and 330,000 tons of wheat flour, equivalent to approximately 450,000 tons of wheat. Through October 2015 shipments (of both wheat and flour) will total approximately 4.5 mmt, expecting exports of 500,000 tons in November, the last month of the crop season.

Ending stocks by November 2015 are expected at 3.7 mmt, higher than USDA as exports are reduced. Approximately 80 percent of wheat stocks are located in southern Buenos Aires province (far from the local milling demand), and it is of medium quality which is not what Brazil normally demands. Farmers will most likely hold to it expecting to sell it under better market conditions (after December 2015) and mix it with the new crop which they expect will have better quality. If not exported to Brazil, it could find a market in West African countries, the Middle East or some regional markets. Last July the government announced a special export quota of 500,000 tons for low protein (below 10.5 percent) wheat from southern Buenos Aires province. However, through late October less than 30,000 tons had been officially authorized to be exported.

Wheat

2013/2014

2014/2015

2015/2016

Market Begin Year

Dec 2013

Dec 2014

Dec 2015

Argentina

USDA Official

New Post

USDA Official

New Post

USDA Official

New Post

Area Harvested

3500

3500

4200

4200

3500

3700

Beginning Stocks

288

288

2490

2490

3175

3675

Production

10500

10500

12500

12500

10500

10200

MY Imports

2

2

35

35

30

30

TY Imports

2

2

35

35

30

30

TY Imp. from U.S.

0

0

0

0

0

0

Total Supply

10790

10790

15025

15025

13705

13905

MY Exports

2250

2250

5500

5000

5000

6000

TY Exports

1675

1675

4200

4200

5500

6500

Feed and Residual

100

100

300

300

100

100

FSI Consumption

5950

5950

6050

6050

6050

6050

Total Consumption

6050

6050

6350

6350

6150

6150

Ending Stocks

2490

2490

3175

3675

2555

1755

Total Distribution

10790

10790

15025

15025

13705

13905

(1000 HA) ,(1000 MT)

Barley:Post projects beginning stocks for 2015/16 at 252,000 mmt, 240,000 mmt lower than USDA's official number. The main malting players found serious difficulties to purchase barley domestically in the past few months, despite offering higher prices than what they theoretically could pay. A lower beginning stock is expected to negatively affect total supply and thus cut potential exports, which are now forecast at 1.8 mmt, 200,000 mt lower than USDA. As in the past report, Post estimates barley production in crop 2014/15 at 2.8 mmt, 100,000 tons lower than USDA, reflecting a lower harvested area (-100,000 hectares) than USDA due to flooding in southern Buenos Aires province. Barley exports in 2014/15 are now estimated at 1.54 mmt, 40,000 thousand tons higher than USDA. Exports through October 2015 were approximately 1.52 mmt, with an expected small export volume for November, the last month of the crop season. Of the total exports, roughly 800,000 tons was malt barley and the remainder feed barley. A smaller beginning stock, a lower production volume, and somewhat higher exports will close the 2014/15 crop season with 252,000 tons of barley in stock. Contacts indicate that some 400,000 tons of feed barley were consumed by the local livestock industry in 2013/14, 100,000 tons higher than USDA, as demand has been strong due to the profitability of adding additional value to grains.

Barley

2013/2014

2014/2015

2015/2016

Market Begin Year

Dec 2013

Dec 2014

Dec 2015

Argentina

USDA Official

New Post

USDA Official

New Post

USDA Official

New Post

Area Harvested

1270

1270

900

800

950

950

Beginning Stocks

333

333

592

492

492

252

Production

4750

4750

2900

2800

3400

3400

MY Imports

0

0

0

0

0

0

TY Imports

0

0

0

0

0

0

TY Imp. from U.S.

0

0

0

0

0

0

Total Supply

5083

5083

3492

3292

3892

3652

MY Exports

2891

2891

1500

1540

2000

1800

TY Exports

2829

2829

1600

1599

2000

1800

Feed and Residual

300

400

200

200

200

200

FSI Consumption

1300

1300

1300

1300

1300

1300

Total Consumption

1600

1700

1500

1500

1500

1500

Ending Stocks

592

492

492

252

392

352

Total Distribution

5083

5083

3492

3292

3892

3652

(1000 HA) ,(1000 MT)

Corn: Post continues to project harvested area for 2015/16 at 2.8 million hectares, 500,000 hectares less than the previous year (or 15 percent less harvested area) and 200,000 hectares lower than USDA's official number. There is currently great uncertainty what the final area will be. Early planted corn in the core area is practically all planted, totaling somewhat less than 1million hectares. Until mid-October 2015, most contacts were very pessimistic about the total planted area, estimating in general a drop ranging between 20-40 percent from last year's area. In the past few weeks, and especially, after the Presidential elections of October 25, there is a change of mood and expectations, with many players hoping that export limitations and export taxes on corn will be eliminated by whoever is elected president in the November 22 runoff. Domestic corn prices have been increasing significantly in the past few days, discounting already some of the gains that local corn prices would receive if these limitations/taxes were removed. Better future corn prices are changing the results of projected returns for the harvest beginning in March 2016. This situation is expected to diminish somewhat the significant drop in planted intentions projected earlier as many farmers might increase at the last minute the area devoted to late corn, in detriment of soybeans. However, in many cases, there is an important productive limitation as most lots going to soybeans have been prepared and treated with chemicals to control weeds and cannot be shifted to corn production.

Post estimates production at 21.0 mmt, 3.0 mmt lower than USDA. This is the result of a smaller harvested area and an expected lower yield. The local market estimates currently range between 20.0-23.0 mmt of production. In general, most crops were being planted with lower technology than normal due to very tight (often negative) projected returns, with less expensive seed, lower-priced agricultural chemicals and less fertilization. Furthermore, a higher share of late corn is expected this season and normally yields significantly less than early planted corn. In the past several months many weather forecasts have indicated a strong El Nino, which in the Argentine corn area means more rain than normal and typically higher yields. However, two months have gone by with no real effects yet.

Post forecasts Argentine corn export for 2015/16 at 11.5 mmt, 3.0 mmt lower than USDA, reflecting the difference in production. Argentine exports for 2014/15 continue to be estimated at 17.0 mmt, the same as USDA. The government so far has announced export quotas for 15.5 mmt, and has provided certificates for 14.3 mmt. Post believes exports through February 2016 should be closer to USDA's official number. Local traders indicate that countries in South East Asia prefer to buy corn from Argentina or Brazil. Currently Brazil is very competitive as result of the strong devaluation. From March onwards, Argentine corn becomes competitive. With a possible elimination of export limitations and export taxes, Argentine corn is expected to become very competitive in world markets. Local traders believe that corn exports to China continue to be very risky and indicate that there is currently little need to export to that market.

Corn

2013/2014

2014/2015

2015/2016

Market Begin Year

Mar 2014

Mar 2015

Mar 2016

Argentina

USDA Official

New Post

USDA Official

New Post

USDA Official

New Post

Area Harvested

3400

3400

3200

3300

3000

2800

Beginning Stocks

1308

1308

1408

1408

1513

1513

Production

26000

26000

26500

26500

24000

21000

MY Imports

2

2

5

5

5

5

TY Imports

1

1

5

5

5

5

TY Imp. from U.S.

1

1

0

0

0

0

Total Supply

27310

27310

27913

27913

25518

22518

MY Exports

17102

17102

17000

17000

14500

11500

TY Exports

12846

12846

18500

18500

15000

11000

Feed and Residual

5800

5800

6100

6100

6500

6500

FSI Consumption

3000

3000

3300

3300

3500

3500

Total Consumption

8800

8800

9400

9400

10000

10000

Ending Stocks

1408

1408

1513

1513

1018

1018

Total Distribution

27310

27310

27913

27913

25518

22518

(1000 HA) ,(1000 MT)

Sorghum: Ending stocks for 2015/16 are now projected at 902,000 tons, 100,000 tons higher than USDA. This is as a result of lower exports expected for 2014/15, now at 1.0 million tons, 100,000 tons lower than USDA. Exports through October 2015 totaled 670,000 tons and approximately 330,000 tons could be exported between now and the end of the crop season in February 2016. Argentine sorghum exports have been significantly slower than earlier projected when there was a lot of expectations of exports to the newly opened (November 2014) Chinese market. Local traders have found difficulties in obtaining export certificates issued by the local sanitary service which pre-monitors each shipment. Sources indicate that the protocol specifies that shipments need to be free of a list of 25 weeds, but there have been some problems with Johnson Grass. The whole process is troublesome and has yet not resulted in fluid exports. The segregated and cleaned sorghum was redirected to other markets. Local exporters indicate that in August 2015 Argentina exported 18,000 tons of sorghum to the US, purchased by a feed company in California.

Sorghum

2013/2014

2014/2015

2015/2016

Market Begin Year

Mar 2014

Mar 2015

Mar 2016

Argentina

USDA Official

New Post

USDA Official

New Post

USDA Official

New Post

Area Harvested

1000

1000

770

800

1000

1000

Beginning Stocks

781

781

1202

1202

802

902

Production

4400

4400

3500

3500

4500

4500

MY Imports

0

0

0

0

0

0

TY Imports

0

0

0

0

0

0

TY Imp. from U.S.

0

0

0

0

0

0

Total Supply

5181

5181

4702

4702

5302

5402

MY Exports

1279

1279

1100

1000

1600

1600

TY Exports

953

953

1000

1000

1500

1500

Feed and Residual

2300

2300

2400

2400

2500

2500

FSI Consumption

400

400

400

400

400

400

Total Consumption

2700

2700

2800

2800

2900

2900

Ending Stocks

1202

1202

802

902

802

902

Total Distribution

5181

5181

4702

4702

5302

5402

(1000 HA) ,(1000 MT)

Rice: The only significant change to the PSD is the production volume of crop 2014/15 which Post increased to 1.491 mmt, but still lower than USDA which is at 1.56 mmt. The main differences are due to a somewhat smaller harvested area and average yield. The local rice sector is in a difficult situation as the international market has slowed down and high domestic costs make local production difficult to compete worldwide. Stocks of crop 2014/15 are high and moving very slowly with a few shipments to Irak. Exporters are looking forward to Iraq's opening bids in next November. Despite low returns, producers have almost finished planting the 2015/16 crop, expecting policy changes that will bring some profitability and relief to the sector.

Rice, Milled

2013/2014

2014/2015

2015/2016

Market Begin Year

Apr 2014

Apr 2015

Apr 2016

Argentina

USDA Official

New Post

USDA Official

New Post

USDA Official

New Post

Area Harvested

241

241

231

225

205

205

Beginning Stocks

227

227

359

359

498

453

Milled Production

1027

1027

1014

969

890

890

Rough Production

1580

1580

1560

1491

1369

1369

Milling Rate (.9999)

6500

6500

6500

6500

6500

6500

MY Imports

5

5

5

5

5

5

TY Imports

6

6

5

5

5

5

TY Imp. from U.S.

0

0

0

0

0

0

Total Supply

1259

1259

1378

1333

1393

1348

MY Exports

465

465

450

450

480

500

TY Exports

494

494

400

400

480

500

Consumption and Residual

435

435

430

430

430

430

Ending Stocks

359

359

498

453

483

418

Total Distribution

1259

1259

1378

1333

1393

1348

(1000 HA) ,(1000 MT)