Argentina

GIEWS Country Brief: Argentina 11-September-2020

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Production of cereals forecast at record high in 2020 due to large sowings of maize and wheat

Exports of maize and wheat forecast at high levels due to sustained weakening of local currency

Prices of grains continued to increase in August and reached record levels

Concerns on deterioration of access to food for vulnerable households

Production of cereals forecast at record high in 2020

Harvesting of the 2020 maize crop was completed in August and production is officially estimated at record high 58.5 million tonnes. The bumper production reflects above average yields and large sowings, estimated at 9.5 million hectares, 20 percent above the five‑year average. The area sown has been on the rise since 2016, spurred by high domestic prices and strong export demand due to the significant depreciation of the country’s currency. Planting of the 2021 crop, which normally takes place from September, has not started yet due to current soil moisture deficits in provinces of Córdoba and Santa Fe. Concerns remain over the impact on planting operations as official weather forecasts indicate drier‑than‑normal conditions in these areas during the September November period.

The 2020 wheat crop, to be harvested from November, is currently at development stage. Crops are in good conditions in the key producing province of Buenos Aires, while rainfall deficits during planting and early crop development stages have affected the crops in other growing areas. In these areas, the official weather forecast points to a high probability of below‑average precipitation and high temperatures in the September‑November period, further lowering yield prospects. However, production is forecast at an above‑average level of 19 million tonnes, mainly due to the large planted area, driven by remunerative prices and strong demand for exports.

Outbreaks of locusts, reported in June in eastern areas, were contained successfully and crop and pasture losses were limited.

Exports of maize and wheat forecast at high levels

Exports of maize, the country’s major exportable cereal, in the 2020/21 marketing year (March/February), are forecast at a well above‑average level of 36 million tonnes. The anticipated high level of exports reflects the large supplies from the 2020 record harvest and strong demand for exports due to a weak domestic currency. The Argentinian peso started to depreciate in mid‑2018 and, as of early September 2020, had lost more than 30 percent of its value against the United States dollar over the past 12 months.

Similarly, exports of wheat are anticipated at a high level of 13.5 million tonnes in the 2019/20 marketing year (December/November) due to ample availabilities and high demand on the international markets.

Prices of grains continued to increase in August and reached record levels

Prices of yellow maize increased for the third consecutive month in August due to a strong pace of exports, coupled with concerns over the impact of current soil moisture deficits on the soon to start planting operations of the 2021 crop. As of August 2020, prices were about 50 percent above the values in August 2019 and reached record levels in nominal terms.

Wholesale prices of wheat grain have increased steadily since January 2020. The upward trend mainly reflects strong international sales, supported by the weaker currency. Concerns over the crop yields affected by dry weather conditions have also added upward pressure. In August 2020, prices of wheat grain were about 40 percent higher year on year, setting a new record.

The high price levels are associated with an upsurge of the year on year inflation, which increased by 42 percent in July in the Greater Buenos Aires Region.

Concerns on deterioration of access to food for vulnerable households

The projections of the Economic Commission for Latin America and the Caribbean (ECLAC) of the United Nations indicate that the economic effects of the COVID‑19 pandemic containment measures are expected to result in a negative Gross Domestic Product growth, up to ‑10 percent in 2020. The anticipated economic downturn is likely to a have negative impact on the access to food of the vulnerable households, whose purchasing power has been already eroded due to the upsurge of inflation.

In order to improve the access to food, the Government decided to keep the price ceilings on several basic food commodities until 31 October 2020. In addition, the subsidy Ingreso Familiar de Emergencia (Emergency Family Income) of ARS 10 000 per household (about USD 147), which was originally designed as a single delivery, was expanded with the prolongation of the containment measures and was granted three times to about 9 million vulnerable people.