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Argentine wheat crop to set even bigger record than had been thought

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Argentina’s wheat harvest will set an even bigger record than had been thought – as will exports, US officials acknowledged, at a time when ports are struggling to cope with surging crop trade volumes.

 

The US Department of Agriculture’s Buenos Aires bureau estimated at 20.8m tonnes Argentina’s 2019-20 wheat crop, of which sowing is nearly complete, a result which would be by 1.3m tonnes the highest on data going back to 1960-61.

 

Indeed, a harvest at that level would be above too the 20.0m tonnes that the USDA has officially forecast, although the estimate is up for review in Monday’s much-anticipated Wasde crop briefing.

 

The bureau’s latest forecast brings it closer to the thinking of some other analysts, with the Rosario grains exchange pegging the crop at about 21m tones, and consultancy AgriPac seeing a total as high as 23m tonnes.

 

‘Strong returns’

The bureau said that its upgrade reflected largely a sowings forecast which, at 6.40m hectares, was 200,000 hectares above the USDA’s official figure, besides being up 360,000 hectares year on year.

 

Furthermore, it noted that “sufficient ground moisture from winter has the crop, overall, in good condition to date”.

 

And, backed by “strong returns, producers are expected to increase inputs and technology to drive higher productivity in 2019-20”, the bureau added.

 

The average yield was forecast at 3.25 tonnes per hectare, marginally above last year’s 3.23-tonnes-per-hectare result, and the five-year average.

 

Brazil import upgrade?

 

Production at this level would support exports of a record 14.3m tonnes, above the USDA’s official figure of 14.0m tonnes, and the current high of 13.83m tonnes set in 2016-17.

 

Hopes for Argentine trade are being buoyed by the prolonged dryness which has hurt successive harvests in Australia, historically the southern hemisphere’s largest wheat importer, and by ideas that shipments to the key market of Brazil may prove larger than had been thought.

 

“Analysts are watching… Brazil frosts for impacts on the market.

 

“Estimates are that Brazil, Argentina’s main wheat destination, will need to import an additional 500,000-1.0m tonnes than earlier projected due to weather issues.”

 

’Challenged logistics’

 

A gain in Argentine wheat shipments from the 13.0m tonnes expected for 2018-19 would come when the country is already struggling logistically to cope with the elevated level of its ag exports.

 

Demand is also being buoyed by the knock-on effects of the China-US trade war, which has driven China to source even more of its soybean needs from South America.

 

And although the government has reinstated wheat export taxes, competitiveness has been supported by the weakness in the Argentine peso.

 

The bureau said that “contacts indicate that lately, logistical systems at the local ports are challenged by the large volumes of wheat, corn and soybeans being shipped in a concentrated window”.

 

Corn outlook

For corn, the bureau forecast exports in 2019-20, which actually starts in March next year, at 34.0m tonnes - a figure flat year on year, but 500,000 tonnes ahead of the USDA’s official estimate.

 

The forecast comes despite an idea that the Argentine corn harvest will fall by 1.2m tonnes to 49.8m tonnes, 200,000 tonnes short of the USDA’s official estimate.

 

“Although average yields in 2018-19 reached record highs, recent studies indicate that most farmers are not applying the fertilizer necessary to maximise crop potential.”

 

Argentine farmers will in September start sowing their 2019-20 corn crop, with October the main plantings month.

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