Argentina's wheat exports will double next season, as
elevated prices encourage farmers to return to the grain, but volumes will
remain low by historical levels, muting the country's return as world shipper.
Argentina will export 6.0m tonnes of wheat in 2014-15, starting
in December - well above the 39-year low of 3.0m tonnes expected for this
season, the US Department of Agriculture's Buenos Aires bureau said.
"Some doubt" that even that even 3.0m tonnes will be reached
this season, the bureau said.
However, even 6.0m tonnes represents a relatively small
volume compared with those that Argentina has historically shipped, to earn
itself a seat on the top table of world wheat exporters.
Shipments approached 13m tonnes in 2011-12, and averaged
9.4m tonnes of the decade to that season, before farmers cut sharply their wheat
plantings, blaming government export curbs.
Argentina has been a particularly important origin of wheat export
supplies for neighbouring Brazil - a structural importer, which has turned
increasingly to the US to fill its needs – but has also offered supplies competitive
enough to trade into African destinations, such as Egypt.
The revival in the popularity of wheat reflects the "extremely
high prices" seen in Argentina after farmers last season cut sowings
drastically, saying that export restrictions, aimed at ensuring adequate domestic
supplies, were denying them the chance to benefit from higher global values.
The price rises proved particularly acute after the government
in 2012-13 overestimated the size of the domestic wheat crop, permitting extra
exports, and meaning that domestic mills had to pay up for supplies in a rally
which peaked late last year.
The United Nations Food and Agriculture Organization,
estimating Buenos Aires wholesale flour prices at $570 a tonne, said that while
values "continue to decline from their record highs of late 2013", they are
still "almost 70% higher than a year earlier, underpinned by the limited
recovery of the 2013 wheat production and low levels of stocks".
There is talk that the government is, ironically, attempting
to encourage wheat sowing in part by easing up on export curbs.
The bureau said that "contacts thing that export taxes,
currently at 23%, could be waived" to promote wheat sowing, with farmers
offered inexpensive credit too, although growers remain sceptical.
"If some of these measures are announced, planted area could
increase even further, but not significantly as most producers would prefer to
wait and see after many years of disbelief and uncertainty," the bureau said in
Farmers have long had a difficult relationship with the government,
for which Argentina's hefty crop exports represent an invaluable source of
foreign currency for the cash-strapped country.
Wheat vs barley
A big incentive to plant wheat is the disappointing results
for many farmers of growing barley instead.
"Barley area grew significantly in the past few seasons
primarily as an alternative for farmers to run away from planting wheat which
was and continues to be closely controlled by the government, making the price
for the farmer lower than it should be," the bureau said.
However, "in the past two crop seasons many barley producers
were disappointed with the quality and yields obtained", with the price also
declining, opening up a discount of $25-35 a tonne to wheat, compared with historic
The bureau forecast Argentina's barley area falling 24% to
950,000 hectares, on a harvested basis, dragging production down one-third to
3.3m tonnes, the lowest in four years.