Argentine Wheat Supply Cut by Floods, Reduced Planting

Argentina is expected to see a decline in wheat output this season after record storms lashed the country’s Pampas grain belt. Also contributing to this, farmers reduced sowing to 3.7 million hectares from 4.4 million hectares last season in response to government-imposed export restrictions.

This decline will make it even more difficult for Argentina, a main supplier of wheat to Brazil and the top exporter of soymeal, to compete on a global market that is already seeing bumper harvests in the Black Sea region and in western Europe.

The country has already received a year’s worth of rain, exceeding the usual 1,000 millimeters of rainfall, with some regions of the Pampas getting 300 millimeters of rain over the last 10 days, as it heads into its spring wet season.

This weak wheat output could drive Brazil, Argentina’s largest wheat buyer to turn to other suppliers, as happened in 2013 when Argentina saw production fall due to frosts, and U.S. exporters took up the market shipping 4 million tons of wheat to Brazil, the highest amount ever shipped from the U.S. to the country.

Given that British and U.S. scientists recently warned that global climate change and more severe and erratic weather events will have larger impacts upon the global food supply, weather-related risks to the main global grain supplying countries from events such as this will intensify.

The U.S. Department of Agriculture (USDA) forecasts an Argentine wheat crop of 11.1 million tons this season compared to a crop of 12.5 million tons in 2014/15. But the country’s export policies that have caused farmers to cut planting could be revised after the October 25 presidential elections, resulting in an increase to production for the following year.