Corn Crops Will Lose 11 Million Tons in South America Because of Drought

Corn crops in Brazil and Argentina, which produce 30 percent of the world’s exports, will lose 11 million metric tons of output after a drought caused “irreversible” damage, forecaster Agroconsult said.

Growers in Argentina will harvest 20 million metric tons of the grain in the current harvest, compared with 27 million tons estimated last month, Andre Pessoa, head of Agroconsult, said in Sao Paulo today. Brazil’s corn forecast was cut to 61 million tons from 65 million tons, he said.

Corn has jumped 12 percent in a month in Chicago trading as dryness and heat caused by the La Nina weather pattern harm crops in South America. Brazil is the third-largest producer of corn after the U.S. and China. Argentina is the second-largest exporter of the grain after the U.S.

“The situation in the countryside is very bad,” Pessoa said. “Losses in corn crops in Rio Grande do Sul and Santa Catarina are irreversible,” he said, referring to Brazil’s two southernmost states.

In Mexico, the world’s fourth-largest corn producer, growers are also expected to lose production because of a drought. The country will likely produce between 22 million and 23 million tons of the grain this year, less than the 24.5 million tons previously forecast, Agriculture Minister Francisco Mayorga said on Dec. 16.

La Nina

The recurring La Nina event may have caused more damage this season than in 2009, when South American corn production slumped after the worst drought in 70 years parched Argentine crops, the Argentine Association of Regional Consortia for Agricultural Experimentation, a farming group, said on Jan. 6.

Potential yields in Argentine corn crops that were planted early will drop 20 percent, forecaster Commodity Weather Group LLC said yesterday.

The U.S. Department of Agriculture cut its forecast for corn production in Argentina today to 26 million tons from 29 million estimated in December. It kept the forecast for Brazil’s corn crop at 61 million tons.

Soybean output in South America will also be harmed by the dry spell, Pessoa said. Agroconsult cut its forecast for soybean production in Argentina to 49 million tons from 53.5 million tons, while reducing the outlook for Brazil to 73.5 million tons from 75.2 million tons estimated last month.

Corn futures for March delivery rose 0.9 percent to $6.575 a bushel at 8:45 a.m. in Chicago. Soybean futures rose 0.3 percent to $12.06 a bushel.

To contact the reporter on this story: Lucia Kassai in Sao Paulo at lkassai@bloomberg.net

To contact the editor responsible for this story: Dale Crofts at dcrofts@bloomberg.net