Milling industry concerned by higher local wheat prices

Milling industry in Argentina is crossing an unusual situation: wheat prices are higher in the domestic market than in the international ones. “July price in Kansas or Chicago markets are 50 or 60 dollars per tonne below Buenos Aires reference”, says Diego Cifarelli, manager at Argentina Federation of Milling Industry (FAIM).
During 2017 and for a second consecutive year farmers had an excellent harvest, above 18 million metric tons, but they aren’t selling their grain in a fluid way. “Farmers are concerning in collect maize and soybean; maybe, once they have finished, thety return to sell the wheat”, Mr. Cifarellil opine.
Wheat milling is estabilized around 6 million tons per year. With an unuseful capacity of other six million tons, domestic market are saturated of flour. Then the only way to expand the business is exports.
“We hope Brazil buys the same volume of flour than in 2017, that is to say about 400.000 tons, unless the appreciation of the Real versus the dollar turns Argentine flour too much expensive”, added Mr. Cifarelli in dialogue with
Brazil, Bolivia and Chile are the largest importers of Argentine wheat flour. The challenge of the milling industry consist to export to overseas markets. “Our target is Eastern Africa, Angola for example”, explain the director of FAIM. “We are maintening contacts with importers there, but our wheat prices surpasses of the competitors. France, Kazajistan and Turkey reach those markets with lower prices than us. Clearly we have a competitiviness problem linked to logistics costs. Our flour is 50 dollars above them”,says Cifarelli.
But the inflation rate (24,8% during 2017) and increases costs of energy and labour are dificulting the reduction of the calling “Argentine cost”.
For this year, it is expected a major wheat acreage and a production surpassing 20 million metric tons. “We hope to go along with de farmers as buyers of his wheat. We don’t want to let them only in hands of exporters”, concludes Mr. Cifarelli.


Contact Mr. Cifarelli. [email protected]

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