Argentina wheat crop forecast cut again amid worrying weather forecasts

Argentina’s wheat harvest this year will likely come in at 16 million tonnes, a senior analyst at the Rosario grains exchange told Reuters on Thursday, a 500,000-tonne cut from the entity’s previous forecast as drought and low temperatures hit the crop.

Argentina is a major exporter of wheat and its role in global markets has come into greater focus amid a worldwide supply crunch linked to Russia’s invasion of Ukraine. Both countries are major wheat producers.

A separate 2022/23 wheat crop estimate also issued on Thursday, from the Buenos Aires grains exchange, forecast a harvest of 16.5 million tonnes, down nearly 6% from the exchange’s prior forecast of 17.5 million tonnes.

Rosario analyst Cristian Russo told Reuters the lower expected yields are the result of months of scarce rainfall plus additional damage from a recent late season freeze.

Last year, the wheat crop reached a record 23 million tonnes.

Argentina is also the world’s top exporter of processed soy oil and meal and the No. 3 for corn. Its grains exports are the main source of revenue for the cash-strapped government struggling to contain surging inflation seen hitting 100% by the end of this year.

Reuters reported on Wednesday that government officials will meet with wheat millers and exporters later on Thursday to discuss worries over the wheat crop and potential shortages for the domestic market.

The country’s producers have already formally declared overseas sales of 2022/23 wheat of 8.85 million tonnes, official data show. There is an existing export cap of 10 million tonnes for the season’s wheat harvest.

Used largely to make bread and pasta, domestic wheat consumption from the 2021/22 harvest totaled 7.6 million tonnes, government data show.

Nearly all of the 2022/23 crop is harvested in November through January, and ahead of those crucial months, near-term weather forecasts are not encouraging.

No significant rainfall is expected next week in the country’s main wheat-producing areas, as well as adjacent farmland in Uruguay, according to a report issued Thursday by the Buenos Aires grains exchange.

Most of the Argentine Pampas region and wheat plantings in Uruguay are both expected to be mostly dry, with rainfall of less than 10 mm (0.39 inch) expected, the exchange noted in its report. It added that strong winds will likely cause higher than normal temperatures.

Tags: wheat, Argentina, crop forecast