Milling industry, current scenario and upcoming challenges
Milling industry, current scenario and upcoming challenges
Wheat milling closed the 2021/22 marketing year stable in terms of processed tons, while flour production may have been the second largest. However, the outlook poses challenges for the new season.
The supply of cereal and the flow of goods from the fields to milling plants are two fundamental factors for the correct functioning of the production chain. From the 2016/17 season onwards, Argentina has been able to maintain a higher domestic production of wheat, resulting in a relatively stable share of processing, when years ago between 40% and 57% of the cereal generated domestically was required to supply the mills.
In the last two years, according to data from the Secretariat of Agriculture, Livestock and Fisheries (SAGyP), the milling of bread wheat in the 2020/21 cycle was 5.8 Mil MT, suggesting the highest milling in relation to production since the 2015/16 cycle (34%). In other words, 1 in 3 tons of wheat from the 2020/21 harvest was milled in the country. However, in the commercial cycle that has just ended (2021/22), if the estimated domestic milling tonnage of 5.8 Mil MT is maintained, there would be a considerable drop in the share of wheat processing, mainly due to the strong increase in production in the last harvest. As a reflection of this, in the 2021/22 season, 1 out of every 4 tons of the cereal was milled by local industry.
Flour production
According to SAGyP data, the processing of raw material in Argentina has resulted in a wheat flour production that, in recent years, has remained relatively stable, ranging from 4.6 Mil MT to 4.8 Mil MT between the 2018/19 and 2020/21 cycles. However, based on the latest monthly data, it can be estimated that bread wheat flour production in the 2021/22 cycle may reach 4.80 Mil MT, just below the all-time record of the 2019/20 season, when 4.83 Mil MT were produced. This record is an improvement on the 4.62 Mil MT of the previous season, while establishing itself as the second highest tonnage of bread wheat flour generated in a single marketing year.
What will happen during the next cycle?
With a view to the 2022/23 period, two challenges stand out that the Argentine milling industry will have to face:
a) Supply: It’s not new to highlight that the local wheat production 2022/23 is going through a severe drought and that the estimates of the results in terms of tons for this campaign have been cut with the passing of the months. Currently, the Guía Estratégica para el Agro (GEA – BCR) estimates that 11.8 Mil MT of Argentine wheat. At the same time, in hopes of maintaining the cereal milling volume at 5.8 Mil MT, local mills will have to absorb 49% of the local cereal, almost doubling their share in a matter of a year. Although this milling share is a high figure, it does not lessen the fact that on more than one occasion (2009/10, 2012/13 and 2013/14) mills have managed to take a larger share of local grain production. However, this is a behavior that breaks significantly with the performance of recent years.
b) Quality: Preliminary quality data, based on samples analyzed by BCRLabs between the 1st and 25th November 2022, show the impact of the climatic conditions that the crop has gone through in the 2022/23 cycle (drought and frost). In 192,000 tons analyzed, an average protein content of 9.9% was detected, lower than the 10.4% observed for the same time last year. Meanwhile, the average Hectolitric Weight is above the previous year with 81.02 kg / hl in 94,000 tons analyzed, when for November last year this parameter was below 80 kg / hl.
Source: https://bcr.com.ar/
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