Lower Argentinian grain soy production to hit exports: analysts

Bulk agriculture exports from Argentina are expected to decline in 2018 due to poor growing weather, according to analysts, suggesting the reduction in production will be felt directly in export markets.

“With the continuity of the drought, the expected yields are declining, which will result in lower exports this year. We foresee lower exports in both corn and wheat,” Patricia Bergero, deputy director of the BCR, told Agricensus.

According to Agustin Tejada Rodriguez, chief economist at the Buenos Aires Grain Exchange (BAGE), grain exports in 2018 will be lower compared to the previous year.

“In the corn segment, lower exports this year will be directly associated to the effects of the drought. We should also see a decline in soybean exports this year due to the drought as well as the higher demand for domestic crushing,” he told Agricensus.

“However, the recent hike in the international price of soybean and corn will partially offset the lower value of Argentine exports this year,” Tejada added.

Analysts have continuously written down their estimates of the soybean and corn crop in Argentina, and last week the USDA slashed 7 million off their soybean production estimate taking it to 47 million mt and 3 million off their corn production estimate to 36 million mt.

The USDA left its wheat estimate unchanged at 18 million mt.

In terms of destinations, a new report by the Rosario Chamber of Commerce (BCR) showed China is the biggest destination of soybean exports, buying 6.35 million mt during last year out of total international sales of 7.34 million mt.

Egypt was second, representing 7% of total soybean exports, with 494,065 mt.

In terms of wheat exports, the study reported that Brazil, Algeria and Chile were the three top buyers.

According to the BCR, wheat exports to the Brazilian market totalled 5.13 million mt (41%), followed by Algeria, with 1.62 million mt (13%) and Chile, with 705,365 mt (6%).

Other key markets were Vietnam and Bangladesh with approximately 5% of total Argentine wheat exports last year each.

Total wheat exports last year had totalled 12.42 million mt, according to the report.

In the corn segment, Vietnam was the largest buyer, with 4.41 million mt (19%), followed by Algeria, with 3.17 million mt (14%) and Egypt, with 2.81 million mt (12%).

Malaysia and Saudi Arabia represented 8% and 6% of local corn exports last year, respectively. Argentina had exported over 23 million mt of corn in 2017.

BCR’s study also reported that the top four grain exporters during 2017 were Cargill, Cofco, Bunge and Dreyfus.

These four companies accounted for 48% of total Argentine grain exports during last year.