Argentina secures key wheat import market

In a landmark development for Argentina’s wheat industry, China has officially opened its market to Argentine wheat after prolonged negotiations spanning seven years. This breakthrough has been enthusiastically embraced by both the exporting and producing sectors, recognizing it as a “historic opportunity” to emerge as a primary supplier to one of the world’s key destinations. The impact on wheat shipments is anticipated to be mostly felt in the forthcoming season.

At the week’s close, the Ministry of Agriculture, Livestock, and Fisheries disclosed that the General Administration of Customs of the People’s Republic of China (GACC) included Argentine companies for wheat export in its Online System for Quarantine Registration of Establishments permitted to export Plants, Animals, and their Products to China. This formalizes the opening of the Chinese market.

Pablo Cortese, President of the National Agricultural Health and Quality Service (Senasa), expressed that “the market is now open” following “almost seven years of work,” deeming it “great news for Argentina.”

Initiated in 2016, the negotiations involved exchanging technical information on phytosanitary issues. Despite several years of ongoing talks interrupted by the pandemic, Chinese officials conducted an audit, visiting various production areas and storage plants and verifying processes. The result was the signing of a protocol.

Cortese emphasized the significance of this action, stating, “This is excellent news for Argentina because China is a major buyer, making it crucial for us. We now have an open door to sell to a significant customer.”

China stands as the third-largest global wheat importer, importing 10 million tons annually valued at USD 3.8 billion in 2022. The top two suppliers to the Chinese market are Australia (with 5.7 million tons) and Canada (with 1.8 million tons).

International estimates suggest China could import around 12.5 million tons in the 2023/24 season.

In contrast, Argentina exported three million tons globally last year, valued at USD 1.05 billion, reflecting the impact of the drought on the previous campaign. In 2022, it shipped a total of 14 million tons, amounting to USD 4.315 billion.

Official projections indicate an expected total harvest of 15.5 million tons for the 2023/24 season, representing a 23% increase compared to the last harvest.

However, Cortese underscored that the protocol for exporting to China is “very demanding,” necessitating a thorough analysis of shipments to ensure they are free from viruses, fungi, or insects prohibited by the buyer.

Gustavo Idígoras, President of the Chamber of the Oil Industry and the Center of Grain Exporters (Ciara-CEC), remarked that with this opening, Argentina “has a great opportunity to be one of the wheat suppliers to China.”

“We are working with Senasa on testing quarantine pests that need to be verified and proving that we are able to certify them. This may take several additional months of work this year, so wheat shipments to China in 2024 will likely not affect the export balance because our export window, starting in July, loses destinations,” Idígoras noted.

While he doesn’t rule out “isolated shipments in the second semester,” it is “most likely to leave a mark in the 2024/25 wheat season.”

Idígoras specified that “Argentina will compete with wheat from the Southern Hemisphere,” so it is necessary to “carefully analyze China’s purchasing seasonality. What is clear is that Argentine wheat is currently very competitive in Indonesia, Malaysia, and Vietnam, countries on the same maritime route, so we already have a developed logistics system.”

In conclusion, he emphasized, “The opening of the Chinese market to Argentine wheat, after seven years of negotiations, was well received by the exporting and producing sectors, who view the news as a ‘historic opportunity’ to become suppliers to one of the world’s main destinations. The crucial aspect is that Argentina, faced with an increasing need from China, along with poor campaigns from our competitors, is already registered (for export) and ready to capture that market.”

Meanwhile, Martín Biscaisaque, President of the Argentine Wheat Association (Argentrigo), highlighted that “this agreement is excellent news for the Argentine agricultural sector, which will be able to access a market with high demand and potential in a year where global wheat production drops after three record campaigns.”

Biscaisaque emphasized that Argentina is the eleventh-largest producer and the eighth-largest wheat exporter globally, with its main destination being Brazil, the world’s leading wheat importer. However, Brazil seeks to achieve self-sufficiency but experienced a production decline due to rains in the current campaign, while Argentina reached an estimated production of around 15 million tons.

The chart below, designed with DataLiner data, shows the world’s top destinations for wheat exports shipped in containers through maritime ports in Argentina.

Top Wheat Exports Destinations | Argentina | 2023 | TEUs

Source: DataLiner (click here to request a demo)

“The authorization of China for Argentine wheat is a historic opportunity for the country to diversify its markets, increase production, and strengthen its commercial and strategic relationship with China. Will we see an Argentine wheat shipment to China this year? It’s too early to tell, but the possibility is there,” he concluded.

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