Lower crop pressures Argentina wheat exports

12 February 20212 min reading
Argentina wheat exports

Argentina has been plagued by dry and cold conditions throughout the 2020/21 growing season, shrinking production estimates to 17.2 million tons, a 5-year low. The diminished wheat crop has significantly lowered exportable supplies, and wheat exports in the 2020/21 season are projected to reach their lowest level in 5 years.

Along with lower production, a crucial factor constraining exports is continued unrest at Argentine ports. Towards the end of 2020, various union strikes severely limited shipments of grain and other agricultural products. Argentina’s wheat harvest begins in November and exports typically peak shortly afterwards. Argentina ships its largest wheat volumes between December and February, with approximately 20 percent of annual exports shipped during January alone. However, due to labor disputes affecting shipping capacity, Argentina only exported 900,000 tons of wheat in December, down 60 percent year-over-year.

wheat exportsBy the first week of 2021, agreements were reached with the striking unions after nearly 1 month of unrest. Traders were hopeful that these resolutions would end port disruptions and allow for strong wheat exports in January to make up for a disappointing December. However, on January 15, a trucker’s union began blockading roads surrounding key Argentine ports, further disrupting grain exports. Port loading data suggests that strikes continue to limit wheat shipments. The country loaded 1.7 million tons of wheat for shipment in January, only half of last year’s volume. With the labor disputes also affecting soybean and corn exports in December, competition for shipping capacity at the ports will intensify over the next few months, further challenging wheat exports. Argentina wheat must also compete with Australia wheat in foreign markets. With Australia’s larger supplies and price advantage in 2020/21, Argentina faces renewed competition for market share in Southeast Asia. Last year, Argentina loaded 1.4 million tons of wheat for Indonesia in the month of January, compared to 100,000 tons this year. Given these challenges, USDA lowered 2020/21 trade year exports (Jul-Jun) to 11.0 million tons, while local marketing year exports (Dec-Nov) are reduced to 11.5 million tons. To achieve these forecasts, Argentina must export wheat during its typically slower months between March and November.
Articles in News Category