The fame of the “breadbasket of the world” is not enough to make up for the crisis caused by Putin’s war: the weight of factors such as the weather, the costs and internal consumption needs
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(Reuters)
Countries such as Argentina and Brazil often fall under the label of “granaries of the world”, and along with Paraguay and Uruguay, agricultural nations with lower volumes but high production yields, they could appear as alternatives to the global wheat shortage.
The sanctions on Russia-fourth largest world producer of wheat according to the United States Department of Agriculture- due to the invasion of Ukraine, and the 30% drop in Ukrainian production (seventh producer), added to the decision of India (third producer) to ban exports of this essential cereal for human consumption, suggested that wheat from the Southern Cone could help fill the gap between global demand and supply.
But climate , costs and internal consumption needs, eliminate this possibility.
Internal demand and climate, limiting factors
The situation is uneven among the four Mercosur partners, one of the most prolific wheat producing areas on the planet.
In Brazil, the area planted with wheat will effectively increase by a minimum of 3% and up to 11%, he told the AFP Embrapa Wheat, specialized division of the Brazilian Agricultural Research Company.
The record prices of the grain, the growing demand and an “expectation of a favorable climate, reinforce the estimate of an increase in the planted area” that could go from 2.7 million hectares in 2021 to just over three million in 2022, according to Embrapa Trigo .
The problem is that Brazil cannot be self-sufficient in this cereal, of which it consumes 12.7 million tons per year, and increasing.
Logistics and transportation costs mean thatit is more convenient for many Brazilian farmers, mainly from the south, to export than to sell in the country, which increases the need for purchases abroad that make Brazil the eighth largest importer of wheat in the world, with 6, 7 million tons purchased from other producers, mainly Argentina, which represents 87% of Brazilian imports of the cereal.
File image of a wheat field near Azul, in the province of Buenos Aires (Reuters)
Argentina also does not offer a solution at hand to populations dependent on imported wheat. Despite the escalation of international prices, the weather is playing tricks on it.
“A drop in the area planted with wheat is expected to be around 8%. Some 6.3 million hectares would be planted against 6.8 million last season. This is due to a very important lack of moisture. It is a climatic technical limitation that affects the reduction, something that these prices are not going to compensate for,” Tomás Rodríguez Zurro, an analyst at the Rosario Grain Exchange, explained to AFP.
“Generally, wheat is planted and then soybeans are planted, but the earth’s water reserves are very low, so the producers decide not to risk planting wheat in the expectation (that) it could reduce them even more. the moisture reserve for summer planting” of the oilseed, he explained.
Soybean and wheat fields (Reuters)
As if this were not enough, “producers comment that they will reduce their technological package, that is, they will use less fertilizer” , much more expensive due to the war, and “that would limit production”.
A drop in the sea
With much less impact on global production, Paraguay and Uruguay, which have good wheat yields, do not expect the productive “needle” to move either.
“Our original concern was that there would not be much wheat, because inputs are very, very expensive today and we don’t know if when the time comes to harvest and sell, prices are going to be today’s. or not. Wheat is an expensive crop, very expensive”, explained a source from the Uruguayan Ministry of Livestock, Agriculture and Fisheries (MGAP), who requested anonymity.
Producers expect a volume “similar to last year or slightly higher”, with a production “sufficient for internal consumption” and stable exports, he indicated.
Uruguay exported almost a million tons of wheat last year.< /p>
Héctor Cristaldo, president of the Paraguayan Union of Production Unions, told AFP that the sector will have its “normal supply.”
“Argentina is weakened , it could produce much more, but with all the (internal) constraints, it probably won’t grow. Brazil is a net importer. It produces but is not self-sufficient “, he summarized.
Paraguay is “the only subtropical country that is self-sufficient and exports wheat. (But) our volumes are not important in the world game. We consume 700,000 (tons) and export another 700,000″, he pointed out.
Paraguayan producers expect between 1 and 1.3 million tons of wheat harvest, half for domestic consumption, half for export, 95% to Brazil and the rest to Chile.
On May 16, after India’s export ban, wheat reached a record of 438.25 euros ( about 460 dollars) per ton at the close of Euronext.
(With information from AFP/offices in Brasilia, Buenos Aires, Montevideo and Asunción)