GIEWS Country Brief: Argentina 07-February-2020

HIGHLIGHTS

• Production prospects favourable for 2020 maize crops

• Cereal production estimated at record high in 2019 due to enlarged plantings

• Exports of maize and wheat in 2019/20 marketing year forecast at record level

• Grain prices well above their year‑earlier values due to strong demand for exports and high inflation

Production prospects favourable for 2020 maize crop

The 2020 maize crops, to be harvested from March, are from vegetative to grain‑filling stages. Vegetation conditions are reported to be favourable across the main producing provinces of Buenos Aires and Cordoba, supported by adequate rainfall amounts since the start of the cropping season in October 2019. The planted area is officially estimated at 9 million hectares, near the record level of 2019, mainly driven by high domestic prices of the grain. Total production is preliminarily forecast to be above average, reflecting the large area sown and expectations of good yields.

Cereal production estimated at record high in 2019 due to enlarged plantings

Production of the 2019 maize crop is officially estimated at a record high of 57 million tonnes, over 40 percent higher than the five‑year average. The bumper production mainly reflects well above‑average plantings and high yields, following favourable weather conditions.

Harvesting of the 2019 wheat crop is about to conclude and production is officially estimated at record level of 19.5 million tonnes due to record high plantings. The enlarged area sown more than offset a reduction in yields due to dry conditions at developing and flowering stages.

Exports of maize and wheat in 2019/20 marketing year forecast at record level

Exports of maize, the major exportable cereal, in the 2019/20 marketing year (March/February) are anticipated at a record high level of 35 million tonnes, more than 60 percent higher than the five‑year average, reflecting abundant availabilities from the domestic production. In addition, the weakening of the local currency, which lost over 60 percent of its value against the US Dollar through 2019, increased the competitiveness of domestic maize on the international markets, strengthening the demand for exports.

In the 2019/20 marketing year (December/November), exports of wheat are forecast at 13 million tonnes, about 25 percent above the five‑year average due to the record 2019 output as well as strong demand for exports, following the sharp depreciation of the Argentinian Peso.

Grain prices well above year‑earlier values due to strong demand for exports and high inflation rate Wholesale prices of wheat grain declined in November and December, as the 2019 harvest improved market supplies, after sustained gains since the start of the year. However, in December 2019, nominal prices were still about 40 percent higher than a year earlier, reflecting strong demand for exports due the weakening of the Argentinian Peso. The high price levels are also closely related with the sharp increase in the year‑on‑year inflation rate, which rose by about 54 percent in December. The high prices of wheat grain have pushed up the prices of wheat products in retail markets. As of December 2019, prices of bread and wheat flour were 45 and 30 percent higher, respectively, than their levels a year earlier.

Prices of yellow maize levelled off in December after a prolonged and sustained upward trend, but were well above their year‑earlier levels. The high prices mainly reflect the strong demand for exports and by the domestic feed sector.