October 19, 2017 / 9:14 PM / a year ago

Argentina sees corn planting up 5.2 percent amid global grains glut

BUENOS AIRES (Reuters) - Argentine farmers are expected to expand corn planting by 5.2 percent this season, the government said on Thursday, as the free-market policies of President Mauricio Macri encourage crop rotation after decades of over-planting soy.

A corn field is seen at the town of Estacion Islas in Buenos Aires province, November 25, 2012. REUTERS/Enrique Marcarian

Soon after taking office in late 2016 Macri eliminated a 20 percent tax that had been placed on international corn shipments and ditched the strict export controls that the previous government had placed on corn and wheat.

The opening of the market has prompted growers to plant both grains in areas that had long been dedicated only to soy, which had not been subject to export controls.

Farmers on Argentina’s vast Pampas grains belt are expected to sow 8.92 million hectares (22 million acres) with corn, up from 8.48 million hectares (21 million acres) in the 2016/17 crop year, the agricultural ministry said in its monthly crop report.

An increase in output from one of the world’s top three corn exporters would add to a global grains glut, with supplies bloated by favorable weather, increasingly high-tech farm practices and tougher plant breeds.

Argentina’s main corn producing rival are the United States and Brazil.

Never has the world produced so much more food than can be consumed in one season.

Global ending stock of total grains — the leftover supplies before a new harvest — have climbed for four straight years.

The over-planting of soybeans over the two previous decades had threatened to replete soils and rob Argentina of its natural advantage as an agricultural powerhouse.

The stalks left by corn provide mulch that allows rain to enter the ground. When water cannot sink in, the runoff carries away soil nutrients, making fields more vulnerable to summer dry spells. While farmers increase corn planting, analysts expect soy area to contract by up to 7 percent.

Additional reporting by Hugh Bornstein and Maximilian Heath; Editing by G Crosse and Sandra Maler

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