Argentina Wheat Production Reduced Sharply from Drought

December 19, 2011

The Argentina Ministry of Agriculture has sharply trimmed its forecast for 2011-12 wheat production lowering the new crop estimate to 12 million metric tons, compared to 13.5 MMT previously. Wheat harvesting was around 50% complete in mid December, based on a Dow Jones news summary.

Very dry conditions in southern Buenos Aires had a detrimental effect on wheat, the Ministry said.  Wheat near Bahia Blanca received only 57% of normal rainfall, August through November, based on official weather reports.  

This was a key period in crop development, winter to spring, when southern wheat was tillering and jointing.  Heavy rainfall finally developed in November, replenishing field moisture in Buenos Aires.   It was too late for wheat to recover.   Late in the development cycle, heavy rainfall would boost grain filling,  but poor germination  previously reduced  plant populations leading to sparse wheat stands.   Wheat growth was also  stunted from prolonged and severe drought.

Sub-par  vegetation in  November confirmed wheat damage in southern Buenos Aires,  the most heavily cultivated area for winter wheat.   The satellite generated vegetation image confirms drought damage,  comparing conditions to a 7-year average.

Argentina Export Potential Shrinking

Argentina has lost market share in wheat exports from severely depressed wheat production in 3 out of the past 4 years.   The country once accounted for 10% of world wheat exports, but now garners only a 5% share.   Low production in 3 of the past 4 growing seasons has been responsible for reduced exports.

Most of Argentina wheat exports go to Brazil, the world's 5th most populated country.  Brazil's very large wheat import needs near 7 million metric tons annually may not be entirely satisfied by Argentina, whose domestic stocks must be replenished first,  before exports are considered.

Recurring drought in Argentina is due to the La Nina becoming more common.  Four different episodes of La Nina have occurred during the past decade.  Buenos Aires is especially prone to drought with La Nina, the province that accounts for 60-65% of national wheat output.   Sometimes, La Nina causes drought in Cordoba and Santa Fe, less important winter wheat growing areas, but key soybean and corn provinces.