February 7, 2005

 

 

Argentinean wheat exports seen to increase 22% in 2005

 

Argentine wheat exports are likely to rise 22 percent in 2005 as the country boosts production after a surge in yields because of better weather conditions.

 

Argentina, the world's seventh-largest wheat producer and fourth-largest exporter in 2004, has raised exports 50 percent in 2005 from the same period a year earlier, according to Mario Garcia, the Agriculture Secretary's wheat program director. Expanded output has allowed Argentina to cut prices and compete for sales in Asia against rival producers, he said.

 

South America's second-largest economy has exported 5.7 million metric tons of wheat so far this year from 3.8 million exported in the same period in 2004, Garcia said, leading the government to forecast that exports will reach 11 million metric tons this year from 9 million metric tons in 2004.

 

"Argentina has gained new markets including India and Sri Lanka as we are offering lower prices than our competition such as the US, Canada and Australia,'' said Garcia.

 

Argentina, which exports wheat at $107 per metric ton, compared with $152.77 in the US, expects to produce 16 million metric tons in 2005, up from 14.5 million last year thanks to better weather conditions. The country allocates about 5 million metric tons of wheat to the domestic market and exports the remaining, Garcia said.

 

The US Department of Agriculture has raised its 2005 export forecast for Argentina to 10 million metric tons, compared with a 9 million-ton forecast last month.

 

'Cheapest Price'

 

Brazil, which is the country's main buyer, has bought about 800,000 metric tons in 2005 to date, down from 2 million a year ago, Garcia said.

 

"We are selling at the cheapest price in the world and even with expensive transportation costs, we are gaining new buyers also in Asia,'' said Adolfo Grobocopatel, chairman of Grupo Los Grobo, Argentina's No. 1 wheat and soybean producer.

 

"These new markets help us to be less dependent on Brazilian purchases,'' Grobocopatel said. Grupo Los Grobo owns 26,900 hectares (66,470 acres) of wheat that stretches from the northern province of Chaco to Buenos Aires province and Uruguay.

 

Year Ahead

 

Egypt, one of the world's largest importers of wheat, on Jan. 15 agreed to buy 295,000 metric tons of the grain from France, Argentina and the US The transaction consolidates Argentina as a main supplier of wheat to Africa, according to the US Department of Agriculture.

 

World production rose 12 percent last year to a record 621 million metric tons, up 0.4 percent from a December forecast, the US Department of Agriculture said.

 

World inventories on June 1 will be 145.3 million tons, up 2.5 million from December's forecast and 11 percent more than a year earlier, the department said. The increase will lead to a drop in the price globally, Garcia said.

 

Last year, the European Union and Canada suffered droughts that affected the world production, Garcia said