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Argentina's wheat ambitions surge as China opens its doors

06 March 20242 min reading

After receiving the green light to enter China's wheat market, Argentina aims to diversify amidst a forecasted doubling of exports to 10 million tons in the 2023/24 season. This strategic move aligns with Australia facing a weakened crop, presenting Argentina with an opportunity to secure a foothold in the Chinese wheat market.

In October 2023, Argentina and China agreed on a phytosanitary protocol for Argentina to export wheat to China. Then, at the end of January, China added several Argentine companies to its list of authorized agricultural exporters. “Sales are now possible, but none have yet been announced,” stated the USDA in its February World Grain Markets and Trade report.

Argentina TY Wheat Exports (Source: Trade Data Monitor, LLC)

Traditionally, Argentina's primary wheat exports take place between December and March, with a focus on other Latin American countries, particularly Brazil. In years with robust harvests, Argentina extends its reach to markets in Asia and Africa. The 2022/23 marketing year witnessed a notable decline in production due to drought conditions and late frost, resulting in the smallest production since 2015/16 and the lowest export volumes since 2013/14, with over half of the exports directed to Brazil. However, with a larger crop anticipated in 2023/24, Argentina's exports are forecasted to more than double, reaching 10 million tons. The report emphasizes the significance of diversifying to new markets, such as China, as Brazil aims to enhance its self-sufficiency. Moreover, with Australia experiencing a weaker crop this year after several years of bumper yields, Argentina sees opportunities to establish itself in new markets.

China TY Wheat Imports (Source: Trade Data Monitor, LLC)

The report highlights China's unique position as both the world's largest wheat producer and, more recently, the largest importer. Despite its substantial domestic production, China continues to rely on significant volumes of international wheat supplies for both food and feed consumption, averaging around 10 million tons in imports since 2020/21. The domestic production in the current marketing year faced challenges due to excessively wet conditions, leading to reduced production and a higher proportion of feed-quality wheat. While Australia, Canada, and the United States have been the primary sources of China's wheat imports this year, recent years have seen China actively seeking to diversify its suppliers.

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