(Adds wheat and soy crop projections, quotes from exchange report, political context)
By Hugh Bronstein and Maximilian Heath
BUENOS AIRES, Oct 9 (Reuters) – Argentina is expected to harvest 47.5 million tonnes of corn this season, the Rosario grains exchange said on Wednesday, down from a previous estimate of 50 million tonnes as growers grapple with dry weather and political uncertainty favors soy planting.
President Mauricio Macri, a proponent of low taxes and free markets who won office in 2015 with strong support from the farm sector, is expected to lose his bid for a second term in the Oct. 27 election. Front-runner Alberto Fernandez favors more government intervention in the economy.
With growers expecting an increase in grains export taxes under a Fernandez government, farmers are reducing corn planting in favor of cheaper-to-produce soy, as a hedge against the uncertainty over agricultural policy after the next government is sworn in in December.
Corn planting started in September with soy going into the ground starting this month. Dryness in western growing areas has prompted some farmers to pass on corn and wait until expected rains in late October to plant soy instead.
“More corn planting at the expense of soy is not ruled out if dry weather continues. Therefore, there may continue to be new adjustments in the coming months that affect the final planting level,” the exchange said in a report.
“The lack of water comes on top of the uncertainty that was already pressuring the corn crop,” it said.
Dryness also prompted the exchange to cut its 2019/20 wheat crop estimate to 20 million tonnes, down 7% from its previous forecast. The season’s soy crop is expected at 51 million tonnes.
Argentina is a major international supplier of corn, wheat and soybeans, as well as its No. 1 exporter of soymeal livestock feed. Grains export taxes are a key source of revenue for a government slammed by recession and inflation expected to end the year at about 55%.
“Most of the agricultural sector is expecting an increase in export taxes if Fernandez is to rule the country. Why? Because it is the easiest way to collect money in Argentina,” said an executive at a major grains export company, asking for anonymity due to the political sensitivity of the subject.
“We are expecting a decrease in corn area, while soybeans can improve by a couple of percent points,” the executive added.
(Reporting by Hugh Bronstein; Editing by Peter Cooney and Tom Brown)