Argentina’s wheat exports to reach record high in 2019/20

According to the US Department of Agriculture (USDA), Argentina’s wheat exports are forecast to reach a record high in the 2019/20 market year, at 14.5m tons, including flour exports in wheat equivalent. The USDA’s Global Agricultural Information Network (GAIN) report also suggests the country’s wheat production will hit a record 20.4m tons in the 2019/20 market year.

Despite the expectation of record exports, future prices for January 2020 stand at US$170 per ton, down US$20 per ton compared to December 2018 sales, according to the USDA. Moreover, in September 2018 the Argentine government reinstated export tariffs on grains at AR$0.04 per US$, presenting further challenges to the sector. At the current exchange rate of AR$0.43 per US$1, exporters need to absorb a further 9.3% cost.

Brazil is forecast to be the top destination of Argentina’s wheat exports in the 2019/20 period at 6-7m tons, according to the USDA, in spite of Brazil’s recent approval of a 750,000-ton tariff-free quota from the US, and possibly other non-Mercosur countries. Following the announcement of the tariff, the USDA reported that Argentine FOB prices dropped roughly US$5 per ton. The tariff-free quota decision is a big blow to wheat growers in Argentina’s Pampas farm belt. After vehicles, wheat is the second largest export commodity from Argentina to Brazil, which generated US$1.3bn in revenues last year.

Argentina is forecast to export about 13m tons of wheat in the 2018/19 market year, according to USDA data.

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