Buenos Aires – March 20, 2021
The 2020/21 wheat shipments in the first four months of the season will be the lowest in 5 years
With 92% of the wheat to be dispatched this season already acquired, exporters will have shipped by the end of March only 47% of the estimated total, 31 pp less than in 2019/20.
The increased inflow of wheat to southern ports anticipates a recovery in exports.
After three months of the current marketing year, it is interesting to analyse the wheat marketing situation to date, both externally and internally.
This cycle has been marked by marked drawbacks in logistics caused by various union conflicts that affected the normal flow of grains, particularly in the first two months of the campaign.
According to data reported by MAGyP as of 03/03, 10.9 Mt of 19.4 Mt have already been marketed in Argentina, which is estimated to be total supply in the current season.
Although in comparison with what happened in the previous season, the commercialization for these dates is markedly behind, both in absolute terms and in relation to the total supply, considering the average of the last 5 years it can be seen that the negotiated is equal date does not differ too much.
Regarding the sectors demanding cereal, exporters have acquired 9.2 Mt, 85% of total purchases.
In addition, considering that the 2020/21 wheat export projections are located at 10 Mt, this sector would have already made 92% of its total grain requirements, after only 3 months of the new cycle.
On the other hand, the milling industry has already acquired 1.7 Mt, 15% of total purchases.
Although purchases in this sector until a few weeks ago were somewhat lagged compared to previous years, purchases of wheat by mills have seen a slight rebound in recent weeks, bringing the current accumulated closer to the levels of previous campaigns .
In any case, the most distinctive aspect of the commercialization of wheat 2020/21 is the proportion of agreed businesses on which a price has not yet been set.
Of the total purchases made to date, 25% still do not have a firm price, a considerably higher proportion than that observed both in 2019/20 and in the average of previous campaigns.
Externally, according to the Foreign Sales Affidavits (DJVE), 9.2 Mt of 10 Mt of 2020/21 wheat projected to be sent abroad throughout the season have already been recorded.
In contrast to the rapid declaration of external sales observed, which reached 46% of the estimated exports before the start of the wheat business year (Dec.), the pace of shipments for the current season is the lowest since 2015/16.
According to data from INDEC & NABSA SA, the wheat exported between December and February added to what was shipped so far in March plus what was scheduled to be shipped in the remainder of the month would reach a total of 4, 7 Mt, well behind the last 4 cycles both in absolute terms and with respect to total exports for each season.
The fall in the months of December and January would be explained, on the one hand, by logistical problems, and on the other, by the decrease in production in the northern and central regions of the Argentine agricultural territory.
The harvest from these regions, which is largely oriented to external markets through the ports on the Paraná River, is dispatched at the beginning of each season or even before the formal start, in November.
Given the drop in production precisely in these regions, there was a decrease in external shipments at the beginning of the campaign, which are usually supplied by the north and center.
Despite this panorama, it was to be expected that as the harvest progressed in the south-central province of Buenos Aires and the territory of La Pampa, a region that benefited from the climate during the development of the crop and obtained a high production, the volume shipped abroad will increase.
But this did not happen: the tonnage exported in February was the lowest of the last five cycles, and, according to what was actually shipped plus what was scheduled to be shipped in the current month, this trend would continue in March.
Likewise, the lower volume shipped to date is correlated with the lower entry of trucks with wheat to the country’s ports.
For the analysis of this second variable, truck arrivals at the port in December are left out, since during more than half of the first month of the campaign the union force measures completely prevented the unloading of grains at terminals.
The graph below, which shows the income of trucks with wheat to Argentine ports from the first full week of January, shows that the weekly arrival of the cereal to the terminals of Gran Rosario was always less than the volume entered the year prior to the average of the last five years.
Thus, during peak harvest, Regarding the arrival of the cereal to the rest of the ports of the country, among which Bahía Blanca and Quequén stand out, it showed two different patterns in the period considered.
From the second week of the year to the sixth, weekly revenues this campaign were lower than those registered in 2019/20.
Regarding this data, it is appropriate to clarify that the southern ports of the province of Buenos Aires were the most affected by the carrier strike that took place between the 4th and 6th week of the year, which is clearly evident in the graph.
However, unlike what happened in the ports of Gran Rosario, in the rest of the port terminals,
The number of trucks arriving with 2020/21 cereal increased significantly once this obstacle was overcome and has been higher than the previous year and the average of the last 5 years in three of the last four weeks.
In this way, if there are no inconveniences, it is to be expected that the greater wheat flow observed towards the ports of Bahía Blanca and Quequén will translate into an upturn in the rate of shipments in the short term.
In the international arena, the relevant news of the week come from the new report on Global Supply and Demand for agricultural products from the United States Department of Agriculture.
On the one hand, on the supply side, global cereal production in 2020/21 would be the highest in history (776.8 Mt).
Mainly, the production in Australia stands out, which would reach a whopping 33 Mt, a historical maximum surpassing the previous mark of the 2016/17 campaign.
In addition, another remarkable aspect is that, considering that in the last two years the oceanic country suffered severe droughts that affected the harvest, the year-on-year production increase would be 117%.
In other words, year-to-year production no less than doubled and more than.
On the other hand, on the demand side, the US agency increased its projections for global demand, mainly due to a greater use for animal consumption in China.
In fact, the use of cereal for this purpose in the Asian country would be 35 Mt, a historical maximum.
This occurs because domestic corn prices in the Great Wall lands continue to be above wheat prices.
Furthermore, this would also lead to China importing 10.5 Mt of wheat, the highest volume in 25 years.
Finally, given that the increase in consumption estimates exceeds the increase in production projections, global final stocks suffered an adjustment of 3 Mt in relation to the previous estimate.
In any case, even despite the cut, the stock would be the highest in absolute terms, although there would be a reduction in the stock / consumption ratio.
The graph shows how China has increased its wheat stocks over the years.
For the current campaign, however, it is expected that given the increased domestic use these will fall for the first time in 8 years.
Also, stocks are anticipated to fall in the top 8 exporting countries 1 as a whole, while they are forecast to rise in India.
