DEC Wheat shipments doubled those of 2020 but are lower than previous years
Considering what has already been shipped as well as what is scheduled to be shipped, 1.65 Mil MT of cereal will be executed this month, double the amount shipped in December 2020. Nonetheless, it would be the second-lowest volume in the past 6 years.
The production volume of the current campaign will reach a historical record, while harvest progress remains in line with that of previous years. However, after starting November with an accelerated rate in the arrival of trucks to the port terminals at Upriver, above previous years, since the beginning of December the income of cereal exhibited a slight deceleration and lagged behind the records in previous campaigns.
From November 3rd to December 16th, we’ve observed around 39,804 truck deliveries, which is below the 2018/19 and 2019/20 campaigns levels. Logically, the current records of the 2021/22 wheat entry far exceed the volume received of the cereal a year ago, when the meager production of the central and northern region of the country, along with union conflicts that paralyzed the region’s ports for practically the entire month of December resulted in a sharp drop in truck entry (20,029 units, practically half of what entered this year).
Similar situation was seen in the cereal’s sea logistics. Taking into account the wheat ships dispatched between December 1st and 15th and what is scheduled to ship between the 15th and 31st of the month, 1.65 Mil MT of cereal will be shipped abroad, more than doubling the volume dispatched throughout December 2020. Yet, despite this great year-on-year growth, the volume that would be shipped in the current month would be lower than that shipped in December of the previous four seasons (2016/17 to 2019/20).
Part of this lower volume dispatched compared to previous years is due to the good Australian wheat production for the new season. As was commented on several occasions, in 2018 and 2019 a severe drought affected the crops of the oceanic country, which opened opportunities for Argentine wheat to cover new markets, particularly in Southeast Asia. However, in 2021/22 Australia would obtain the largest harvest in its history, recovering its usual customers and representing strong competition for Argentine wheat in those countries given its geographical proximity and free trade agreements. Argentine shipments to Southeast Asia in the first month of the 2019/20 campaign reached 630,000 MT, while in 2021/22 they would be 320,000 MT.
On the other hand, shipments to Africa and South America, particularly Brazil, have also decreased. It is estimated that in the opening month of the commercial year 2021/22, 570,000 tons of ARG wheat will be shipped to the African continent, while in the 2017/18 and 2018/19 campaigns, about 850,000 MT were shipped each December. As for shipments to South America, between what is already shipped and what is scheduled to be shipped until December 31st, they total 657,000 MT, while in 2019/20 the volume reached 920,000 MT. In this case, the variation in shipments to Brazil stands out, which in the current month of December would be 380,000 MT, contrasting with the 660,000 MT of 2019/20 wheat shipped in 2019.
Regarding exports of the cereal, what stands out is a complete lack of news. The strong registration of Export Permits (DJVE) between September and October led 2021/22 to set a record for the time of the year with 9.1 Mil MT declared, yet November ended without any new exports declared, and so far in December, a mere 1,618 MT were recorded.
The pause in the DJVE record occurs even though national wheat was recently found among the cheapest in the world. Taking FOB prices for close shipment in the ports of the main cereal exporting regions, Argentine wheat remained competitive during November, with prices below France, the United States, and the Black Sea. However, Australian wheat was consistently below the FOB price in Argentine ports and even in the last week fell considerably.
Finally, concerning prices in the local market, after having closed on Friday at the month’s maximum (241 USD/MT), the equivalent price in dollars of the Cereal Arbitration Chamber was exhibited uneven, falling a few dollars on Wednesday to 237 USD/MT and closing on Thursday at 240 USD/MT. However, it is worth mentioning that current prices are the highest in history for the first month of the campaign.
Source: https://bcr.com.ar/
Photo: REUTERS/Stringer
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