Argentine wheat exports hopes cut, as early harvest yields disappoint


Argentina’s wheat exports will drop further than had been thought, undermined by wet conditions which, after preventing some sowings, have raised concerns over crop development too.

The US Department of Agriculture’s Buenos Aires bureau pegged Argentina’s wheat exports in 2017-18, on a December-to-November basis, at 10.8m tonnes, a drop of 2.2m tonnes from the record high expected for the current season.

The figure is 700,000 tonnes lower than the USDA’s official estimate, and represents a second downgrade in days, after the International Grains Council last week cut by 400,000 tonnes to 10.9m tonnes its forecast for shipments.

Price comparisons

Argentina’s wheat export potential is being particularly closely watched this season, given a poor harvest in neighbouring Brazil, a structural importer of the grain.

A shortfall in Argentine supplies could open up Brazil to other origins, or at least curtail rivalry for orders by other importing countries.

Indeed, Brazil’s farm ministry last week pressed for approval of 750,000 tonnes of wheat imports free of the duty usually applied to purchases from outside the Mercosur trade bloc, of which Argentina is also a member.

Argentine prices are notably competitive at $185 a tonne as of October 25 from upriver sources on an FOB basis, compared with $194 a tonne for Black Sea milling wheat, and $214 a tonne for hard red winter wheat from US Gulf ports, according to the IGC.

‘Excess rain’

The bureau said its reduced Argentine export estimate was “a reflection of” a weaker harvest forecast, which it cut to 16.8m tonnes – 700,000 tonnes below the USDA’s official estimate, and a drop of 1.6m tonnes year on year.

The downgraded harvest forecast in turn reflected largely an estimate of the country’s wheat area, on a harvested basis, of 5.2m hectares, 400,000 hectares below the official USDA figure.

“Excess rain during the planting and growing seasons will negatively affect the harvested area,” with sowings haven fallen short of expectations thanks to wetness which cost some 150,000-200,000 hectares of losses in what was seeded.

‘Disappointing yields’

The bureau also flagged that “there are some doubts about the final quality, which will depend on how high yields are and how effective was the application of fertilizers as continued rains could have leached out part of the applied nutrients”.

Fertilizers, besides boosting yield, are also key for quality, with nitrogen for instance providing a boost to protein levels.

The bureau added that results from early harvesting, in northern areas, had shown “yields somewhat lower than earlier expected”.

Crop condition

The comments tallied with ideas from the Buenos Grains exchange last week that yields from the early northern harvest were below initial forecasts, pegging the national result so far at 1.13 tonnes per hectare.

It also flagged some potential losses to late frosts and hail, but as of October 25 pegged the Argentine wheat crop at 59.6% good or excellent, a rise of 2.2 points over the previous reading, two weeks before.

The IGC last week cut its Argentine wheat production figure by 600,000 tonnes to 15.9m tonnes, saying that “excessive rains in Argentina, which prevented some wheat area from being planted, continued in the first part of October in parts of Buenos Aires and La Pampa provinces”.


Readers choice: TOP-5 articles of the month by UkrAgroConsult