Argentine wheat sowings for the 2022-23 harvest will fall despite soaring prices, the Buenos Aires grains exchange said, citing the enhanced appeal of barley as a lower-cost and quicker-growing rival.
Argentine farmers will, in their imminent winter wheat planting campaign, seed 6.50m hectares with wheat, a decline of 200,000 hectares year on year, the exchange said, following a survey over the past month.
“As the weeks have passed, a slight negative trend has been consolidating over the area that the wheat crop would occupy during this new cycle,” the exchange said.
The dip in area to a four-year low comes despite soaring wheat prices both internationally and in Argentina itself, where benchmark January 2023 Matba-Rofex futures have averaged $282 per tonne in the run-up to the planting window, a rise of 41% year on year.
That exceeds the 39% gain in Argentine barley prices, 31% increase in corn values and 23% appreciation in soybeans.
“When compared with the evolution of the prices of other crop options, it is observed that wheat registers a better performance,” the exchange said.
However, it highlighted too that prices of some major input costs have, on some comparisons, outperformed crop value gains, supporting the case for farmers choosing grains with lower needs for the likes of fertilizer and herbicides.
“Among the factors that explain the decrease [in intended wheat area] are the increases in input costs [and] the relative improvement in the margins of the barley crop,” the exchange said, noting too Argentina’s history of targeting wheat, rather than barley, for the likes of export taxes.
There was “uncertainty in relation to future changes in… domestic policies that affect the wheat crop”.
By contrast, there was a “lower expectation of intervention on the [barley] crop through public policies,” the exchange said, noting too the “the advantages that this cereal has” in terms of its relatively rapid development.
This allows great scope for sowings of a follow-on crop, notably second soybeans.
The exchange said that wheat plantings of 6.50m hectares would still be high by historical standards, and the fourth largest on record.
For 2021-22, it lifted its estimate for Argentine wheat production by 600,000 tonnes to 22.4m tonnes, reflecting an increased area figure.