November 2, 2022

 

Argentina to allow wheat export delays due to drought

 

The government of Argentina is expected to announce measures, possibly within days, that will allow wheat exporters to postpone agreed-upon shipments, following a severe drought that devastated the crop and caused concern about the domestic supply, Reuters reported.

 

Measures to allow businesses to reschedule agreed-upon wheat exports without incurring the customary 15% fine from authorities will be released in the coming days, according to a source at the nation's CEC grains exporting chamber, which represents companies buying the grain.

 

A government source with firsthand knowledge of the situation said that taking action to allow for delays in wheat shipments was "probable." The source said it is being studied.

 

The remarks are the clearest sign yet that Argentina, one of the top exporters of wheat, will attempt to postpone wheat exports in the face of a drought that could result in the worst harvest in almost a decade.

 

The CEC source urged swift implementation of the plan. If the government is going to do it, let it happen right away, the person said, adding that they have to go back and tell customers in Indonesia, Morocco, Algeria, and Egypt that Argentinian wheat has burned, and they have to renegotiate those contracts.

 

After dry weather hit American growers and the Russian invasion of Ukraine halted shipments, the move may further heat up global prices. Russia and Ukraine are major producers of wheat.

 

In October, Argentina's government met with wheat exporters and millers to discuss worries about the drought-stricken crop, with millers increasing pressure to keep more supply for the domestic market.

 

The significant Rosario grains exchange has drastically reduced Argentina's anticipated 2022–2023 wheat harvest to 13.7 million tonnes, which would be the nation's lowest level in seven years and far below the record-breaking 23 million tonnes in 2021/22.

 

Official data showed the nation's farmers have already formally declared 8.9 million tonnes of wheat will be exported in 2022–2023. 7.6 million tonnes of wheat from the 2021/22 harvest were consumed domestically in Argentina.

 

From 2021 to 2022, about 2 million tonnes of wheat went unsold. There is currently a 10 million tonne export limit in place for the 2022–23 wheat harvest.

 

The head of Argentina's milling industry association FAIM, Diego Cifarelli, said that the sector was "concerned" about supply and that there had been discussions with the government regarding potential shipment delays.

 

He said that the demand for wheat could be satisfied if there were no further losses, even though a shortage might drive up prices.

 

-      Reuters