President Alberto Fernández recently pledged that Argentina would seize the opportunity to help meet global wheat demand while taking advantage of the high prices following Russia’s invasion of Ukraine. Poor harvest, however, could change the picture.
“It now appears that Argentina’s opportunity to fill the gap left by Ukraine is slipping away as the export quota has been reduced by 31% and the /23 wheat harvest is likely to be the worst in 12 years,” says Niels Rasmussen, Chief Shipping Analyst at BIMCO.
Argentina was the 6th largest exporter of wheat in 2021, accounting for 7.2% of global export volumes. In the first four months of 2022, the country exported 9.5 million tonnes of wheat from the record /22 harvest.
In March 2022, the government of Argentina set a wheat export quota at 10 million tonnes for the marketing year of /23 to stabilize domestic prices and combat double-digit inflation.
“At best, Argentina’s exports for the /23 marketing season will therefore drop 6.4 million tonnes. At worst, delays in wheat planting due to drought, particularly in the northeast, are casting doubt on whether the full export quota will be filled,” says Rasmussen and adds “Adding to those risks, in the midst of high fertilizer prices and the inability to export their wheat to markets where prices are higher, farmers in Argentina are shifting towards other crops.”
Brazil and Indonesia are the largest importers of Argentinian wheat, and the country makes for a large share of imports in both markets. A reduction in export volumes from Argentina will add to the worldwide wheat shortage already felt in the global markets.
