Brazil has chosen a good time for a record wheat crop.
It is of course a boon for any net importer – as Brazil is of wheat – to reduce its requirements, as the country will in 2022-23 thanks to a record harvest.
Conab, the official Brazilian ag bureau, pegs the crop at 9.36m tonnes, with Safras e Mercado this week talking of an even bigger result, of 10.94m tonnes.
But it is especially beneficial to achieve a bumper crop when prices are high, and when the country’s default import supplier, Argentina, looks like suffering a howler.
The Rosario grains exchange overnight, citing La Nina-inspired dryness, cut its forecast for Argentina’s forthcoming, 2022-23 harvest by 1.2m tonnes to 16.5m tonnes – a seven-year low, and down 6.5m tonnes from last season.
And this when stocks, already forecast by the US Department of Agriculture shrinking to 1.43m tonnes over the season, offer only modest scope for further drawdown to support trade.
So Argentina’s exports, which the USDA estimates at 16.50m tonnes for 2020-21, look like falling sharply too – potentially also to a seven-year low.
Not that Argentina’s poor harvest swill go unnoticed on the global market.
Importers in the likes of central and north Africa, and the Middle East, have been expanding wheat purchases from South America – whether from Argentina, or in fact from Brazil, which thanks to geography has been using largest harvests of late to boost exports as well as stem buy-ins.
These importers will now need to look elsewhere to make up these supplies, at a time when Russia looks the only major wheat origin with much spare export potential.
It appears an unfortunate time for importers to be raising their reliance on Russia, when the country is in the geopolitical doghouse.
Argentina, meanwhile, will miss out on a chance to bolster its credentials as an exporter – and more importantly grab more of the foreign currency which it so desperately needs.