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Argentina’s Wheat Exports to Shrink as La Niña Bites

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Argentina’s 2022/23 wheat exports will drop 57% year-over-over to 7 million tonnes, due to deepening drought brought on by a third consecutive year of La Niña, according to a new Rosario Grains Exchange forecast. Last year, Argentina exported 16.25 million tonnes of wheat, with most exports destined for Brazil, Asia, and North Africa. 

Typically, Argentina, the Southern Hemisphere’s second-largest wheat exporter after Australia, helps fill the global wheat supply gap after Northern Hemisphere countries’ wheat has been sold. 

Right now, however, as Argentina contends with one of its worst droughts this century, each of its major wheat-growing regions —  Cordoba, Buenos Aires, and Santa Fe — is expected to see a sharp drop in production. Currently, Gro’s Climate Risk Navigator for Agriculture, weighted to Argentina’s wheat-growing areas, is showing the Gro vegetative health index, a measure of a crop’s health, at its lowest reading in over 20 years; soil moisture is also at a record low. 

Caption: The red line on this chart from Gro’s Climate Risk Navigator for Agriculture shows Argentina’s wheat crop at its lowest plant health readings in more than 20 years.  

Overall, the Rosario Grains Exchange is forecasting Argentina’s 2022/23 wheat harvest, which is getting underway now, to come in at 11.8 million tonnes, its lowest level in seven years and well below last year’s bumper crop of 23 million tonnes. Likewise, the Buenos Aires Grains Exchange and the USDA lowered their expectations for Argentina’s wheat crop last week. 

While the Buenos Aires Grains Exchange cut its wheat production estimate by 1.6 million tonnes to 12.4 million tonnes, the USDA, in its November WASDE report, trimmed 2 million tonnes from its 2022/23 production estimate, taking it to 15.5 million tonnes. 

As a weaker wheat harvest could hinder Argentina’s ability to meet domestic demand, Argentina’s government last week granted wheat exporters permission to push wheat shipments that are contracted for the December to February period back by 360 days.   

Since 2000, drought conditions have caused major losses in wheat production in large parts of Argentina’s agricultural heartland. The dry conditions have also set back planting of the country’s corn and soybean crops, as Gro highlighted here.

In Australia, Gro’s Australia Wheat Yield Forecast Model shows abundant rainfall has been boosting wheat yields. But high levels of precipitation there are also likely to substantially reduce grain quality, depressing production of milling wheat and driving an abnormally large percentage of the crop to animal feed uses. 

This year global wheat inventories outside of China are forecast to drop to the lowest level in 14 years, marking the third consecutive annual decline in wheat ending stocks excluding China.

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