Argentina (one of top five wheat exporters) with high probabilities of not exporting wheat this year

Argentina historically known in agricultural trade as a big player in the wheat global market has high probabilities of not exporting wheat this campaign.

With a dry season that is becoming in some areas the worst in the last sixty years, jointly with government measures which regulate the export price to farmers charging them with export taxes, the expected planting area will suffer a decrease of 20 to 25% compared to last year. Most of the farmers prefer not to plant wheat and wait for the soybean planting season with better water reserves and perhaps better economic conditions.

Last year was one of the worst in wheat production for Argentina due to the same mentioned reasons. Only 4 to 5 M tons were exported and almost no ending stocks will remain. This year all or most of the production will go to domestic consumption.

This will have an impact in the global market. Argentina has been traditionally one of the top five exporters and in last decades always accounted for a 15 to 20% market share of global demand (see graph). The last time Argentina did not export wheat was back in 1890. Brazil has been traditionally the main importer. Brazil consumption has been increasing significantly during last years.

Argentina situation arises in an year when world stocks started at the lowest ratio in 30 years and export origin supplies are 43% below the last 10 year average. In addition and despite world financial crisis, demand is expected to increase another 8 to 10% this year to a record 122 M tons.

It’s an amazing world when Russia and Ukraine replace Canada and Australia and Argentina in the top five wheat exporting countries.

According to a recent USDA report, the ranking of world wheat exporters is undergoing a seismic shift. The United States is forecasted to lead wheat exports by a huge margin, exporting about 25 million tons. The European Union is forecasted to come in second, about 10 million tons behind the U.S., but they will also likely be the world’s top wheat importer, so they’ll really have net exports of just 5.5 million metric tons.

Russia and Ukraine will come in with about 9.5 MMT and 9 MMT, respectively.Following these five leaders are Canada, Australia and India, with export forecasts of 8 MMT, 7 MMT and 5 MMT, respectively. Market Share by the five traditional exporters (U.S., Australia, Canada, EU and Argentina) has fallen from 84% to 63% in just three years.

José Gobbée for AGRIFOOD THINK TANK