Advance wheat purchases fall to a 7-year low
Advance wheat purchases fall to a 7-year low
Advance wheat purchases by industry and exports fall 80% year-on-year to less than 1 million tonnes. Argentina’s share of wheat imports from Brazil fell to 62%, with export prices proving uncompetitive.
Wheat sowing is progressing, and although estimates suggest that next season’s production will rebound after the disastrous current season, marketing figures for the new harvest starting in December are far from the figures achieved in previous years.
According to the Secretariat of Agriculture, Livestock and Fisheries (SAGyP), the sowing of the cereal for the 2023/24 season is very close to completion, and progress on the projected area would be 98% in the country as a whole. In Córdoba, Santa Fe, Entre Ríos and La Pampa sowing is complete, while in Buenos Aires 4% of the projected area remains to be sown, where the possible occurrence of rains is expected to sow the estimated.
As for the evolution of wheat marketing for the new season, the most recent data indicate that industry and exports have taken just 1.0 million tonnes to date, which would represent 6% of the estimated production of 15.6 million tonnes. This number is striking if we compare it with previous years. For the same period in 2022, for example, cumulative wheat purchases for the new season amounted to 5.1 million tonnes, 45% of total production. Although this percentage is exceptionally high as such a sharp drop in production as a result of the drought was not expected, for the same period in previous years, wheat purchases for the new season amounted to 20% of production, which indicates that this year traders are more cautious about the coming season.
Of the 1.0 million tonnes of wheat already traded, almost all of it is export sales, which are at their lowest level since 2016. However, although traders are clearly acting with caution due to the uncertainty generated after the brutal blow of the drought to the current campaign, during the last three weeks there has been a greater dynamism in trade and more than 30% of total operations have been registered. Regarding wheat sales to export in the new season, 53.2% are at prices to be fixed. This percentage differs markedly from the data of previous years and is high in relation to them, which again shows the uncertainty of operators regarding prices and production conditions for the coming season.
With the export operations of the current season, a fall in Argentina’s share of total import purchases from Brazil is evident. During the last few years, around 90% of Brazilian wheat imports accumulated during the first seven months of each year were of Argentinean origin. This share, however, fell to 62% in 2023. To compensate, Brazil imported 377,000 tonnes of Uruguayan origin, and almost 381,000 tonnes from Russia for the first time in more than a decade.
This fall in foreign sales is part of an international context in which prices have been stable during the last week. After the sharp rise in prices following Russia’s exit from the Black Sea grain agreement and the Russian and Ukrainian attacks on grain export ports, the market began to take into account Russia’s high competitiveness in the market, which managed to contain prices. India on Wednesday said it would release 5 million tonnes of wheat from its stocks to stabilize prices, while Ukraine on Thursday announced a “humanitarian corridor” to allow cargo ships trapped in its ports to sail into the Black Sea.
Argentina’s current high export prices, affected by low wheat volumes in the current season and the time of year, are having a clear impact on foreign trade.
Source: https://bcr.com.ar/
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