Jun 30, 2022

Argentina 2022/23 Wheat Crop Off to a Poor Start

Author: Michael Cordonnier/Soybean & Corn Advisor, Inc.

Wheat producers in Argentina have a lot to worry about concerning their 2022/23 wheat production. Dry weather is currently impacting the wheat planting as well as the wheat acreage. In some areas of Argentina, it has been dry for the last two months prohibiting farmers from planting their wheat. The wheat that has been planted is experiencing reduced germination and slow early growth.

Both the Buenos Aires Grain Exchange and the Rosario Grain Exchange have already reduced their estimates for wheat acreage and have warned that their estimates may decline further if rain is not received soon. There is some rain in the forecast, but probably not enough to reverse the moisture shortage. The Rosario Grain Exchange reported that the wheat planting is stuck at 65% complete due to a lack of soil moisture and that the wheat condition is the worst in 12 years.

Even before the dry conditions reduced the wheat acreage, farmers were already expected to reduce their wheat acreage due to high fertilizer prices and potential government interference in the wheat market. Soybeans require less fertilizer, so some farmers opted to plant less wheat so they could get an earlier start on planting their 2022/23 soybeans next October.

Argentina produced a record 22.4 million tons of wheat in 2021/22. Under a best-case scenario, Argentina may produce 18.5 million tons of wheat in 2022/23.

Farmers are also worried about additional government interference in the wheat market. For the 2021/22 crop, Argentine wheat exports were limited to 14.5 million tons as the government tried to limit domestic inflation, which is currently running at approximately 60%. For the 2022/23 crop, the wheat exports will be limited to 10 million tons and that could be reduced further. The goal of these limits is to hold down domestic consumer prices, which also reduces prices paid to farmers for their wheat.

With a high cost of production and a lack of clarity concerning future government actions, farmers decided to be cautious and pulled back on their wheat acreage.