Argentina Wheat Market – MY 2022/2023 Overview
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Drought Severely Affects Argentina’s Wheat Production for MY 2022/2023
Argentina’s Wheat production reached its highest volumes in MY 2021/2022, when the harvested area increased by 155 kha YoY, resulting in an increase of 4 Mmt YoY. For the MY 2022/2023, the USDA estimated that Argentina’s Wheat production would reach 19.5 Mmt. Yet, according to the new February 2023 forecast , production will only reach 13 Mmt, 5.5 Mmt less than initial estimates. This is mainly due to unfavorable weather conditions, which have also affected Corn and Soybean production. How did Argentina’s Wheat production decrease affect its exports at the beginning of MY 2022/2023?
Figure 1: Argentina Wheat Production (MY 2019/2020 – 2022/2023)
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Argentina’s Wheat Production Decrease Significantly Affected Exports at the Beginning of MY 2022/2023.
Argentina’s Wheat exports reached 14 Mmt in MY 2021/2022, increasing by 5 Mmt YoY. It occurred mainly in Dec 2021, Jan, Feb & Mar 2022, when exports rose to an additional 4.1 Mmt (YoY). At the beginning of the MY 2022/2023, due to unfavourable weather conditions that resulted in lower Wheat production in Argentina, exports were 1.6 Mmt lower YoY in Dec 2022, and 2.3 Mmt lower YoY in Jan 2023. So far, in Feb 2023, Russia, the U.S., Australia and Ukraine are the most competitive for Wheat exports, reaching all together 6.7 Mmt. WithTurkey as the main destination for Wheat, at 1 Mmt. What are the main destinations for Argentina’s Wheat in MY 2022/2023 ?
Figure 2: Argentina Wheat Exports ( MY 2020/2021 – Dec & Jan MY 2022/2023)
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Russia and Bulgaria Are Taking Over Argentina on the Algerian Market
Argentina’s top Wheat destination in the MY 2021/2022 was Brazil, with 4.6 Mmt, 0.2 Mmt increase YoY. Followed by Algeria with 1.2 Mmt (+0.9 MmtYoY) and Indonesia with 1.1 Mmt (+0.65 MmtYoY). At the beginning of the MY 2022/2023, Brazil remains the main destination with 0.5 Mmt in Dec 2022 & Jan 2023, although decreasing by 0.7 Mmt YoY. Indonesia follows in the ranking, reaching 0.2 Mmt in the same period. While Algeria registered no imports from Argentina so far, the country imported 0.7 Mmt of Russian Wheat and 0.3 Mmt of Bulgarian Wheat. Argentina’s Wheat production decrease affected its position in more than 33 markets so far. How will ArgentinaWheat FOB prices compete with other producers, such as Russia and the U.S., at the beginning of the MY 2022/2023?
Figure 3: Argentina’s 10 Top Wheat Destinations MY 2021/2022
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Argentina Wheat FOB Prices Remain Less Competitive at the Begining of the MY 2022/2023
Argentina Wheat FOB prices were lower than Russia and the U.S. before Mar 2022. In Apr and May 2022, Argentina FOB prices exceeded Russia’s by USD 30/mt and by USD 57/mt on average, respectively. Yet, they were, USD 63/mt and USD 29/mt lower than U.S. FOB prices in Apr and May 2022, respectively. Later on, Argentina Wheat FOB prices increased to be higher than Russia and the U.S. for most of the rest of 2022. Argentina’s Wheat prices increased due to inflation and quotas on exports. At the beginning of the MY 2022/2023, ArgentinaWheat FOB prices are USD 80/ mt higher YoY in Dec 2022 and USD 70 /mt higher YoY in Jan 2023 on average. In addition, Argentina’s prices remain USD 59/mt higher than Russia’s, yet, only USD 2/mt higher than the U.S. Overall, Argentina’s Wheat production decreasing in the MY 2022/2023 partially led prices to remain less competitive so far. Will Argentina’s exports recover for the rest of 2023?
Figure 4: Argentina, Russia & the U.S. Wheat FOB Prices (Dec 2021 – Jan 2022)
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In a Nutshell
Argentina exports increased by 5 Mmt YoY in the MY 2021/2022 thanks to production increasing by 4 Mmt YoY. Yet Argentina’s prices were higher than other exporters, such as the U.S. and Russia, in 2022. Due partially to the government limiting exports to prevent inflation.
In the MY 2022/2023, the drought in Argentina strongly affected production. As a result, production should be 9 Mmt lower YoY, according to USDA estimates.
At the beginning of the MY 2022/2023, The production losses have already affected exports negatively, declining by 3.9 Mmt YoY in December 2022 and January 2023. Meanwhile, Russia is more competitive as Wheat prices remain USD 59/mt lower than Argentina’s in January 2023.
