Wheat Exports To Remain Muted

BMI View : We have revised up our estimate for Argentine corn production in 2013/14 to 24.5mn tonnes from 23.8mn tonnes, as the ongoing harvest will be better than anticipated. We believe that wheat exports will fall y-o-y in 2013/14, though are likely to rise in 2014/15 on the back of greater output.

Earlier in 2014, we revised down our output forecast for the ongoing 2013/14 Argentine corn harvest due to unfavourable weather conditions. However, greater than average rainfall in January and February will mean that there will be no significant decline in yields in 2013/14. For wheat, even though planting area remained relatively low by historical levels as more farmers switched to soybeans and corn, we estimate that output recovered from last year's poor harvest, growing by 18% y-o-y to 11.0mn tonnes in 2013/14.

Historically Low For Wheat
Argentina - Corn & Wheat Area Harvested ('000 ha)

We expect Argentine wheat exports to decline y-o-y in 2013/14. The Argentine government introduced export restrictions for wheat in 2013 in order to boost domestic stocks. In 2012/13, wheat exports fell 72.5% y-o-y to reach 3.6mn tonnes, and the USDA estimates wheat exports of 2.0mn tonnes in 2013/14, one of the lowest levels in decades. Argentine wheat stocks remain low, and we expect export quotas to remain over the coming months. Corn exports, on the other hand, remain at typically high levels, though export quotas also exist for corn due to inflationary concerns.

Fall In Wheat Exports
Argentina - Exports Of Select Grains ('000 tonnes)

We forecast corn production in 2014/15 to rise by 2% y-o-y to reach 25.0mn tonnes, while wheat output (for which we are just beginning the planting season) will increase by 10% y-o-y to 12.1mn tonnes. We believe that the growth in wheat production can mostly be attributed to a larger planting area as a result of high domestic wheat prices. However, at about 4mn hectares, wheat planting area will remain low by historical standards as a result of the export restrictions. Nonetheless, we note that crop planting decisions could change significantly, as plans are likely to be made very close to planting time in an economy experiencing mid- double-digit inflation and considerable currency weakness.

We believe that both corn and wheat exports will pick up marginally in 2014/15, due to an increase in grain output, as well as a slight recovery in stocks as a result of the government's current export restrictions. In our view, wheat consumption growth will be almost flat, which will result in a mild recovery of stocks. Although the government is likely to raise the export quotas to accommodate the increased supply, we do not expect the quotas to be abolished, or even significantly increased, meaning that growth in grain exports will remain muted. Ho

Argentina - Wheat & Corn Production & Consumption
2013 2014f 2015f 2016f 2017f 2018f
Wheat Production, '000 tonnes 9,300.0 11,000.0 12,100.0 12,705.0 13,340.2 14,007.3
Wheat Consumption, '000 tonnes 6,200.0 6,212.4 6,300.2 6,365.5 6,407.2 6,424.9
Corn Production, '000 tonnes 26,500.0 24,500.0 24,990.0 25,489.8 26,254.5 27,042.1
Corn Consumption, '000 tonnes 7,630.0 e 7,934.1 8,204.4 8,431.9 8,612.4 8,742.2
e/f = BMI estimates/forecasts. Sources: USDA.
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Related sectors of this article: Agribusiness, Grains - Agribusiness
Geography: Argentina

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