Buenos Aires, August 13th. After the severe drought that cut 30% of the soybean harvest and 7 million metric tons of maize, officials from Presidente Macri’s Administration show themselves enthusiasts, waiting for a super harvest in the 2018/19 season that generates dollars for a starving economy. Maybe, this wheat harvest brings the first happiness for the Government.
According to the Rosario Grain Exchange (BCR) the wheat planted area climbed to 6.32 million hectares -propelled by excellent soil conditions at the beginning of the season and an excellent price at harvest times, and production could reach 21 million metric tons, the largest harvest in the Argentine history.
In this sense, the deputy Agricultural Markets Secretary, Jesus Silveyra, agrees with BRC’s estimation and estimates that wheat harvest could reach 20.5 million metric tons, from 18.5 MMT in 2017/18 season. With these output level, Argentina could export more than 13 MMT during the next commercial season.
In 2017, Argentine wheat exports reached 13.1 MMT, where 40% was destined for Brazil and 14% to Algeria, the second customer that year. The other 46% was distributed among other 46 countries, including the US who bought 15,600 tons.
“There is a high volatility scenario, but last week, January 2019 wheat prices at Future Markets reached 229 dollars per tonne, the highest value of the cereal during the pre-campaign in the last 15 years”, Gustavo Rabaglia, an analyst from grain broker Kimei, says to www.eFarmNewsAr.com.
“After that, the USDA’s report impacted negatively over prices, and wheat drop to 213 dollars per tonne, that remains to be an excellent price for farmers”, Ravaglia added. Local agriculturers are trying to capture these prices through “forward contracts” with exporters, i.e., assuming the compromise to deliver the grain to buyers at harvest, in exchange for to fix the current prices. “There is a record volume of forward contracts that implies more than 4 million metric tons, a huge amount compared to the usual volumes. We also see farmers covering their business through Future Markets, for example via put and call options”, Ravaglia opines.
“Is there any risk factor over wheat prices at the local market from here to the harvest?”, inquiry eFarmNewsAr to Ravaglia. “We are seeing a dramatic climate situation in Europe and harvest cuts in countries like Russia and Ukraine. We consider that Argentine will be able to supply wheat to the countries in North Africa, usually supplied by those countries. But the market is in a “volatility mode” and everything could happen”, Ravaglia ended.
