Argentina’s wheat exports recover from drought impact

01 May 20242 min reading

Argentina’s wheat exports for the 2023/24 season (December-November) are once again on the rise following the drought of the previous year. Argentina expects to harvest 16 million tons of wheat this season and anticipates sending 10 million tons of wheat to world markets. In the previous season, Argentina’s wheat sales were below 4 million tons.

Argentina has increased its wheat sales in the first 4 months of the export season thanks to a higher 2023/24 harvest. Argentine wheat shipments have already exceeded the total for the 2022/23 season. According to the USDA, Argentina is expected to produce 15.9 million tons of wheat in 2023-24, with exports rising to 10 million tons. In 2021-22, Argentina harvested more than 22 million tons of wheat. However, the country faced a severe drought last season, resulting in production dropping to 12.5 million tons and exports to less than 4 million tons.

Argentina exports wheat globally, but its most consistent trading partner is neighboring Brazil. Brazil benefits from both proximity to Argentina and favorable trade treatment under Mercosur. In recent years, Brazil has increased wheat production, but still relies on imports to meet domestic needs. Brazil’s 2023/24 crop was negatively affected by late-season rains at harvest, resulting in a smaller crop than expected and a higher proportion of feed-quality wheat. Consequently, Brazil will increase wheat imports during 2023/24, much of which already has and will continue to come from Argentina. According to USDA estimates, Brazil’s wheat production is projected to reach 8 million tons. With a domestic demand of 12 million tons, Brazil is anticipated to import nearly 6 million tons of wheat this season.

Besides Brazil, Indonesia is another major buyer of Argentine wheat. Indonesia does not grow wheat, so domestic consumption is entirely dependent on imports, mostly from Australia. Following 3 consecutive bumper crops, Australia’s 2023/24 crop is forecast lower as a result of drier El Niño weather. With lower Australia wheat exports, Argentina has opportunities to ship more. El Niño also had a negative impact on Indonesia’s rice production, which is its primary food grain. With higher rice prices, wheat-based noodle consumption is expanding as a lower-priced alternative. One driver of this demand is the improving price competitiveness of wheat, as wheat prices have been trending lower since peaking in mid-2022 and rice prices have been trending higher since early 2021.

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