BUENOS AIRES — Grains powerhouse Argentina could produce a record corn harvest in the upcoming season while wheat output shrivels, a trend that will likely deepen over the years ahead as growers balance government policy risk against zooming market demand. A severe drought in the US Midwest has put No. 2 global corn supplier Argentina in the spotlight at a time of increasing world food consumption. Growers in Argentina's vast Pampas grains belt complain about export restrictions on corn and wheat. While they lobby for a more open market, corn is the better bet thanks to genetically modified seeds that allow for ever-wider planting; it is also easier to sell. These factors reduce relative risks for corn growers, who have feuded for years with President Cristina Fernandez. Despite complaints from the farm sector over her hard-to predict policies, the 59-year-old Peronist easily won a second term last year, promising to increase further the government's role in Latin America's third-biggest economy. Chicago corn futures have, meanwhile, soared 50 percent over the last two months. That has motivated Argentine farmers to ride the rally despite the country's December-January dry spell, which has limited cash needed for seeds and other investments as farmers hunker down for September planting. Argentina is the world's sixth-biggest wheat exporter and top supplier to neighboring economic giant Brazil. But even as wheat prices are up 38 percent in the last two months, they are not keeping pace with corn. So the risk of abrupt changes in government policy is seen as more severe for wheat farmers than corn growers. “When the rules are changed arbitrarily and without notice, you have to be very careful about what you plant,” said David Hughes, who manages 7,000 hectares (17,000 acres) in bread-basket province Buenos Aires. Until two years ago, Hughes planted 1,200 hectares of wheat each year. As 2012/13 sowing winds up, he has only 260 hectares of wheat but plans to increase corn and soybeans. All factors considered — including crop rotation, irrigation, seeds, fertilizers and other inputs — the cost of cultivating corn versus wheat in Argentina is about the same. The difference, and one unlikely to go away anytime soon, is that corn is a lot easier to offload. “Wheat in Argentina has different specifications for different uses. So, as happened with my 2010/11 wheat crop when I did not have the specifications needed for the domestic market, I could not sell it. The carryover was huge,” he said. “That hurts because, due to the export curbs, I could not sell my surplus on the international market. There was no way for me to change the grain into money,” Hughes added. Argentina is sowing 3.6 million hectares with wheat this season, down 22 percent from the previous crop year, according to the Buenos Aires Grains Exchange. The government expects the 2011/12 wheat season to have produced 13.2 million tons, a 16 percent drop from the previous crop year. — Reuters
