July 6, 2020

Argentina forecasts record wheat production for the 2020-2021 harvest



Argentina anticipates a record harvest of wheat and barley of 24.75 tons for the fine season of the winter crops 2020-2021, according to estimates released this Tuesday by the Buenos Aires Cereal Exchange.

The projection of sowing of winter cereals, according to climate and market forecasts, shows that the area destined for wheat would grow 3% year-on-year to a total of 6.8 million hectares, while that of barley would fall by 5 % to 950,000 hectares.

The improvement in yields allows agricultural analysts to predict a production of 21 million tons of wheat, a new historical record for Argentina, above the maximum achieved in the 2018-2019 season with 19 million tons harvested, and 3 , 75 million tons of barley.

These results would allow a year-on-year variation in terms of production of 11.7% in the case of wheat, but with a 7.1% drop for barley, resulting from a decrease in the planted area, said the analyst of the Bolsa de Cereals from Buenos Aires Esteban Copati in the presentation of the new agricultural season.

The gross value of the wheat and barley chain for the 2020-2021 campaign was estimated at about 10,770 million dollars, with a growth of 6.5% compared to the gross value of this year, while exports of both cereals are expected. for 3,635 million dollars, which would represent an increase of 9%, and a contribution of 1,200 million dollars to the tax coffers by way of collection, which represents an increase of 25% also explained by the rise in export duties.

The estimates are also based on a “favorable” climate forecast for the production of winter crops, with good soil moisture, although some excesses are expected in the northeast of the agricultural region and rainfall deficits in the southwest.

UNCERTAINTY DUE TO THE CRISIS

The growth of production would take place in a framework of important expansions of the wheat area since 2015, when the then president Mauricio Macri (2015-2019) lifted restrictions on foreign sales of the cereal and reduced the rates of export duties. , which encouraged investments in the agricultural sector.

The Buenos Aires Cereal Exchange, however, foresees that the 2020 campaign will register a fall in the gross product of the six extensive cultivation chains of -4.5%, due to the decrease in international prices and the fall in quantities due to the drought in the summer (austral) that has forced to cut production estimates.

“To materialize a new growth of the gross product of the winter crops chain, it will be very important to clear the doubts, the sources of uncertainty that still exist in relation to the planting decision,” said the entity’s chief economist, Agustín Tejeda. Rodríguez.

In this sense, he urged the national government to send a message about “what will be the regulatory framework” in the midst of “a very complex scenario” due to the global crisis generated by the COVID-19 pandemic, the trade war, the African swine flu and lower international prices that affect production margins.

CLEAR GAME RULES

Argentina enters this international crisis with two years of accumulated recession and a significant deterioration in economic and social indices, which leads the main international organizations and private consultants to foresee that this year the economy of the South American country will suffer a contraction of – 6%.

The president of the Buenos Aires Cereal Exchange, José Martins, stressed that “the agro-industrial sector is one of the sectors of the Argentine economy least affected” by the semi-paralysis generated by the restrictions imposed by the Government since March 20 on the mandatory quarantine to limit coronavirus transmission, because the activity was declared essential and continued to function.

Martins urged the sector to “export more without neglecting the internal market” and work on a “public-private agreement”, without modifying the rules of the game and betting on the continuity of Mercosur, the regional bloc that Argentina integrates with Brazil, Paraguay and Uruguay.

The Minister of Agriculture, Livestock and Fisheries of the Nation, Luis Basterra, recognized both the agro-industrial sector for “its commitment to the situation experienced with the coronavirus pandemic.”

FAVORABLE INTERNATIONAL CONTEXT FOR ARGENTINE WHEAT

Argentine wheat faces a great opportunity in the international market, said Tejeda Rodríguez, with importing nations advancing and increasing their purchases and reducing barriers, as in the case of Egypt, Turkey or Morocco.

On the other hand, according to the economist, some exporting countries are taking restrictive measures for wheat sales abroad, such as those adopted in the last month by Russia, Ukraine, Kazakhstan or Romania.

“This puts the global wheat market in a very difficult scenario. But this situation puts the country in front of a great opportunity to take advantage of the increase in imports, the space that the main competitors may leave, presenting our country as a reliable supplier of wheat in crisis situations, recovering the lost participation and gaining space especially in extra-Mercosur markets, “he stressed.

If these projections are fulfilled, Argentina could set a new record for wheat exports exceeding 13 million tons, above the average of the last four export campaigns that had an average of 12 million tons, and above 12, 3 million tons that it is estimated that Argentina will export from the 2019-2020 campaign.

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