Last week concluded with some excellent news for Argentina’s grain exporters, with the government finally publishing the terms of a long-awaited proposal for dredging of the Paraná River.
The international tender for a 30-year licence includes a pivotal provision to deepen the navigation channel in the country’s main trade waterway. This will allow exporters to load bigger cargoes at the Rosario export hub, increasing their competitiveness in global markets.
Limited moisture
While there were some excellent rainfall events across parts of Argentina’s winter cropping area in late October and the first three weeks of this month, it has not been enough to halt a decline in the production outlook following a season where the rainfall events have largely been hand to mouth in many regions.
While certainly better than last season, the limited soil moisture reserves have kept a lid on winter crop estimates for much of the year. According to last week’s crop update from the Buenos Aires Grain Exchange, soil-moisture conditions in 74 percent of the wheat area fell into the quite broad category of optimal to adequate, compared to 73pc a week earlier and 58pc at the same time last year. The balance of 26pc was rated poor to dry compared to 41pc in that category in the same week in 2023.
The BAGE crop report rated the condition of this year’s wheat crop as 34pc good to excellent, 38pc fair, and 28pc poor to very poor. The proportion of the crop in the good-to-excellent category was down from 38pc a week earlier, the area rated fair was down two percentage points, and the poor-to-very poor proportion increased from 22pc to 28pc. At this time last year, only 20pc of the wheat area was rated good to excellent, and 37pc fell into the poor-to-very poor classification.
Production lost in north
With the early harvest in full swing, the Rosario Grains Exchange reduced its 2024-25 wheat production outlook by 700,000 tonnes last week, citing delayed rainfall in key agricultural regions as the primary cause. This drops the exchange’s estimate from 19.5 million tonnes (Mt), off a planted area of 6.7 million hectares (Mha), with the adjustment reflecting the impact on crop yields of the persistently dry weather conditions, particularly in September. The lost production is primarily in the northern regions where 310,000ha of wheat have reportedly been abandoned. RGE pegged 2023-24 wheat output at 14.5Mt, off a seeded area of 5.5Mha.
According to RGE, the rains arrived too late for the country’s north, where further downward adjustments are possible. However, in the central provinces, the rain in October was the key to halting further crop deterioration, and positive harvest surprises are possible. Further south, across most of Buenos Aires and the northern part of La Pampa provinces, the dreaded late frosts have not occurred despite a very cold spring, and the November rains have continued to consolidate the high-yield outlook.
Central fares better
The downward production revision comes despite some early harvest results being slightly better than expected. As of November 20, around 29pc of the wheat area had been harvested compared to 26pc at the same time last year. Yields in the northern provinces of Chaco and Santiago del Estero are poor as expected, but in the central province of Santa Fe, some of the early yields are coming in around 50-100kg/ha higher than estimated a month ago. While the yield results have been quite variable, there are no signs of major yield loss in the central areas due to late frosts or crop disease affecting grain fill.
The lower wheat forecast from RGE aligns it with the BAGE, which currently forecasts a crop of 18.6Mt, but off a lower planted area of 6.3Mha. Its final 2023-24 production number was 15.1Mt off a planted area of 5.9Mha.
Barley static
Barley output is expected to be slightly higher year-on-year, with the BAGE currently calling 2024/25 output 5.1Mt, compared to 5Mt last season. The planted area is also up fractionally from 1.25Mha to 1.3Mha. The early season barley planting intentions were even larger, but good rainfall in May, lower urea prices and a spike in wheat prices persuaded some farmers to shift some paddocks from barley to wheat at the last minute.
Competitive trigo in demand
On the export front, Argentinian wheat is reportedly close to displacing Black Sea and European Union origins into open African demand for December and January delivery and has already been competing very aggressively with Australian and Black Sea exporters into key southeast Asian destinations in recent weeks.
Before last week’s revision to wheat output, RGE was suggesting 2024-25 wheat exports could be as high as 13.3Mt, one of the highest on record. That will no doubt be revised lower with the smaller crop, but the number will still be significant from a historical viewpoint.
The USDA Foreign Agricultural Service Buenos Aires bureau expects wheat exports of 12Mt in the 2024/25 marketing year, based on its production estimate of 18Mt. This figure includes the wheat equivalent of wheat flour exports, is up from 8.2Mt in 2023-24, and is 500,000t more than the USDA posted in its November global supply-and-demand update. Local exporters believe farmers will need to sell significant volumes of wheat to finance summer crop inputs and land rentals and will most likely store soybeans once harvested as an inflation hedge as they tend to hold their value better due to consistent demand from the domestic crushers.
In the nine months to the end of September, wheat exports totalled 5.96Mt, with Brazil the primary destination at 51pc of volume. However, the second biggest customer was Indonesia, with 22pc of the volume, the Asian destination where Australian exporters are feeling the stiffest competition from Argentina in the first quarter of 2025. Other destinations of note were Columbia, Ecuador, Kenya and Peru, each with around 3pc.
FAS is projecting barley exports of 3.3Mt in the new crop marketing year, up from 3.1Mt in 2023-24, but 100,000t less that the USDA’s official November estimate. Exports in the first nine months of 2024 were 2.8Mt, with China and Brazil accounting for 83.3pc of the total at 1.66Mt and 680,000t respectively.
Source - https://www.graincentral.com
