May 22, 2013

Argentine Wheat Acreage Expected to Increase 40% in 2013/14

As farmers in Argentine finish harvesting their 2012/13 soybean and corn crop, they are also preparing to plant their winter wheat crop. The 2013/14 wheat crop is expected to be much improved over the dismal 2012/13 wheat crop. The Argentine Secretary of Agriculture is expecting farmers to increase their wheat acreage this year by 40% to 4.5 million hectares. The increased acreage is due to improved market conditions, a reduction in taxes on wheat, and good planting conditions.

The 2012/13 wheat crop in Argentina was one of the worst in decades with only 3.16 million acres planted and a 9 million ton production. Farmers reduced their wheat acreage due to drought conditions at the time of planting and government interference in the wheat export market. The weather during October and November of 2012 was very detrimental to the wheat crop as it was approaching maturity. Heavy rains during the period resulted in wide spread severe flooding rendering many fields un-harvestable.

The domestic demand for wheat in Argentina is approximately 6.5 million tons so the stunted 2012/13 wheat crop only allowed for a limited amount of wheat to be exported. Since domestic supplies were tight, the government restricted the amount of wheat exports in an effort to hold down domestic food prices. Brazil is the number one importer of Argentine wheat and since the export volumes from Argentina were limited, Brazil has to source higher priced wheat from Europe and North America.