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Argentina expects bumper wheat harvest this month

Dec, 03, 2018 Posted by datamarnews

Week 201849

Argentinian farmers are gearing up for a bumper yield this month, expecting to harvest an unprecedented 19.2m of wheat in the coming weeks, up 8% on year-ago levels according to the Buenos Aires Grain Exchange. The country expects to earn around US$3bn from wheat shipments, and another US$750m from barley. This revenue, together with the 10.5% earned in export taxes, will be a much needed help to the economy’s budget deficit. Wheat growers have sold a record quantity in advance, with experts predicting that wheat prices will also rise from the current US$237 per ton – US$70 less than US prices.
Meanwhile, according to commodities trading group Bunge, Brazil plans to raise its wheat imports, mainly from Argentina, by 11% to 7m tons next year as a consequence of the losses it has suffered this year due to heavy rain. The quality of Brazil’s crop is expected to be inferior next year, with grain suffering from high moisture levels in southern Brazil.  This means that much of the lower quality wheat will need to be exported, with the cargoes generally bound for Africa and Asia.

Supporting Sources:

https://www.hellenicshippingnews.com/break-in-clouds-for-macri-as-argentina-revs-wheat-harvesters/

Break in Clouds for Macri as Argentina Revs Wheat Harvesters

in Commodity News 28/11/2018
Artillery is arriving for President Mauricio Macri’s battle to revive the Argentine economy.
Farmers in Argentina’s bread basket are on course to reap bumper yields in December, with a record wheat harvest raking in export dollars and tax revenue after a tumultuous year that has seen the currency plummet and Macri turn to the International Monetary Fund.
Growers will collect 19.2 million metric tons of wheat in the coming weeks, eight percent more than last year, according to the Buenos Aires Grain Exchange. Much of the wheat is sent to millers in neighboring Brazil.
Argentina’s wheat shipments will be worth about $3 billion, with another $750 million coming from barley, which is snapped up by Saudi Arabia for animal feed, said Gustavo Lopez, an independent farm consultant. Macri needs those crop dollars and export taxes of around 10.5 percent to narrow twin trade and budget deficits and rein in bond spreads.
“Wheat dollars are a bridge for Argentina over the summer months, and this year they’re going to be especially important,” said Martin Vauthier, an economist at Buenos Aires-based consultancy Eco Go SA. “Capital inflows always help to bring down country risk.”
Fiscal austerity and sky-high interest rates are in place to calm the peso, which has lost about half of its value this year. But the mix is strangling an economy that’s expected to contract by more than 2 percent. Farming is therefore emerging as a ray of sunlight for Macri, providing a much-needed boost to gross domestic product.
Growers have bet big on wheat and barley planted in winter after the worst drought in decades crippled production of soybeans and corn. The upcoming harvest will shore up their finances, rescuing the seasonal investment cycle, said Eugenio Irazuegui, head of research at grains brokerage Enrique Zeni SA.
As profits are reinvested in the next round of bean and corn planting, the “agricultural push” could spur a return to modest growth in 2019, Bradesco economists led by Dalton Gardimam wrote in a report. That would improve reelection prospects for Macri’s coalition, dampening investor concerns about a reversal of his pro-market policies.
Fields in the winter-crop belt in southern Buenos Aires and La Pampa provinces have withstood frosts and wheat yields will rise 13 percent year on year, according to a crop tour last week organized by the Bahia Blanca Grain Exchange. That will compensate losses in regions to the north.
“Argentina needs this harvest to avoid a debacle,” sad Ignacio Philipp, a grower in Bahia Blanca who farms 5,000 hectares (12,300 acres). “When the farm sector does well, the country does well.”
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Bunge sees Brazil 2019 wheat imports rising 11% on crop failure

SAO PAULO, Nov 9 (Reuters)
Brazil wheat imports are expected to increase 11 percent in 2019 to 7 million tonnes as the country grapples with crop failures this year, a senior manager for commodities trading firm Bunge Ltd said on Friday.
In Brazil, weather problems including rainfall during the harvest have contributed to the forecast for Brazil’s 2018 wheat crop being cut to 5.3 million tonnes from the 6 million tonnes projected originally, said Edson Csipai, Bunge’s manager of grain origination.
Brazil may also face higher prices in meeting demand with wheat from Argentina, the largest exporter of the grain to Brazil, despite its neighbor’s record harvest of 20 million tonnes this year. Farmers in Argentina have advance sold more of their crop than ever before with the harvest just getting underway.
“The situation in Argentina is extremely comfortable in terms of price,” Csipai said at an event in Sao Paulo.
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Argentina should be able to raise prices soon as leading wheat exporter Russia is facing crop failures as well and will likely need to reduce its shipments starting in January or February, he said. Argentine wheat is currently priced around $237 per tonne, roughly $70 below the United States’ product.
The quality of Brazil’s grain will also suffer with high moisture levels in southern Brazil and only 1.9 million tonnes of the harvest will be fit for baking flour for bread, the principle form of domestic demand. Brazil uses an estimated 11 million tonnes of so-called type 1 wheat annually for bread.
Nearly half of the harvest will be lower quality type 2 wheat used in products like cookies, while 890,000 tonnes will be destined for animal feed.
Much of the lower quality wheat will need to be exported, with the cargoes generally bound for Africa and Asia, Csipai said. (Reporting by Roberto Samora Writing by Jake Spring Editing by Chizu Nomiyama)

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