Rising star of South America Argentina

11 August 20236 min reading
Argentina is a significant producer of various grains, with wheat, corn, and soybeans being the primary crops. The country has a long tradition of grain farming, and its agricultural practices combine modern technology with traditional methods. It is among the top global exporters of corn, wheat and soybeans. According to the USDA report, Argentina’s wheat production is forecast to increase to 19.5 million metric tonnes (MMT) in the 2023/24 marketing year, resulting in wheat exports (including wheat flour as wheat equivalent) of 13.7 MMT.

With a population of over 47 million people, Argentina is a vibrant and diverse country located in South America. It is the third-largest economy in Latin America and the eighth-largest country in the world, spanning an impressive area that encompasses stunning landscapes, from the snow-capped Andes Mountains to the vast pampas and the breathtaking Iguazu Falls.

Argentina has a thriving agricultural industry and is globally recognized as one of the major players in grain production and export. The country’s favorable climate, fertile soil, and vast agricultural lands contribute to its success in this sector. Its agricultural industry, plays a vital role in the country’s economy, contributing to employment, rural development, and foreign exchange earnings.
Argentina is a significant producer of various grains, with wheat, corn, and soybeans being the primary crops. The country has a long tradition of grain farming, and its agricultural practices combine modern technology with traditional methods. It is among the top global exporters of corn, wheat and soybeans.

Argentina’s agricultural sector is gearing up for a transformative year as the recently published Argentina Grain and Feed Annual report by the United States Department of Agriculture (USDA) reveals promising projections for wheat and corn production in the 2023/24 season. The country anticipates a rebound in wheat production and a record-breaking corn harvest, which are set to have a significant impact on both domestic consumption and international trade. 

After facing a challenging season in 2022/23, marked by drought and late frosts, Argentina’s wheat production is expected to bounce back strongly. The USDA Post in Buenos Aires forecasts wheat production to reach 19.5 million metric tons (MMT) in the 2023/24 season, a substantial increase compared to the previous year. This recovery is attributed to several factors, including better weather conditions and the financial motivation for farmers to plant wheat as a means to generate income for financing their summer crops. The report highlights that the harvested area for wheat in 2023/24 is estimated to be around 6.5 million hectares.

The increase in production is significant for Argentina, as it is expected to lead to a surge in wheat exports. Projections indicate that Argentine wheat exports for 2023/24 will surpass 13.7 million tons, more than doubling the exports of the previous year, and the third highest on record. This export boost will position Argentina as a major global player in the wheat market, with the potential to secure its place as one of the leading wheat suppliers.

The main destination for Argentine wheat exports is expected to be neighboring Brazil, which is rapidly expanding its own wheat production while reducing imports. Additionally, Indonesia is projected to remain a significant market for Argentine wheat, with an estimated import volume of over 1 million tons. Other African and South American countries are also anticipated to be important consumers of Argentine wheat.

Furthermore, the report suggests that domestic wheat consumption in Argentina is likely to remain stable at approximately 6.5 million tons in the 2023/24 season. Wheat is a staple in the country, widely used in traditional bread bakeries, dry pasta manufacturing, and the production of cookies and crackers. Despite high inflation rates, wheat consumption has shown resilience, reflecting the essential role of wheat-based products in the Argentine diet. 

Flour exports are forecast at 400,000- 450,000 tons product weight for the marketing year, the equivalent of about 600,000 tons of wheat. Based on official data, flour exports dropped in 2022 and in the first two months of 2023. “Contacts in the industry report that part of the lost export volume comes from residents of neighboring countries entering Argentina and buying flour in northern border cities where the combination of currency arbitrage and Argentine price controls make flour relatively cheap,” USDA reports.

According to official data, in 2022, wheat accounted for 36 percent of all grain milling in the country. The average flour yield of the mills was 75 percent flour. There are approximately 180 mills, but the 10 largest accounted for approximately 50 percent of total production. The province of Buenos Aires accounted for half of the Argentine flour production, followed by Cordoba with 23 percent and Santa Fe with 13 percent.

Argentina’s corn production is set to reach record-breaking levels in the 2023/24 season, projected at an impressive 54 million tons. The report attributes this expected surge in corn production to various factors, including favorable returns, increased planting acreage of approximately 7 million hectares, and more favorable weather conditions compared to previous seasons.

With attractive returns and the importance of crop rotation for soil health, corn continues to be a well-established crop choice for Argentine farmers. The report highlights that corn planting is supported by the significant drop in production costs, particularly due to the availability of less expensive fertilizers. Additionally, the forecast of normal or wetter weather conditions compared to the past few seasons further encourages corn cultivation.

The projected record-breaking corn production in 2023/24 is anticipated to fuel Argentina’s corn exports, reaching approximately 38 million tons. This volume positions Argentina as one of the leading global corn exporters. The primary destination for Argentine corn exports is expected to be Southeast Asia, followed by South American and Middle Eastern countries.

Despite the increase in exports, domestic corn consumption in Argentina is projected to experience only a marginal increase, reaching 14.8 million tons in 2023/24. The livestock sector is the largest consumer of corn in Argentina, accounting for approximately 70% of total domestic consumption. Other sectors, such as pork and cattle feeding, are expected to increase their production and, consequently, their consumption of corn. The severe drought that has impacted pasture production has forced cattlemen to turn to grain feeding, boosting the demand for corn as an alternative feed source.

In conclusion, Argentina’s agricultural sector is poised for a remarkable turnaround in the 2023/24 season, driven by the projected rebound in wheat production and the record-breaking corn harvest. These positive developments are expected to revitalize the sector, support economic recovery for farmers, and strengthen Argentina’s position as a major player in global wheat and corn markets.

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