Upriver approaching historical average of wheat discharge at ports

Upriver approaching historical average of wheat discharge at ports

Wheat truck deliveries at Upriver continue to advance. Barley continues to register export trades and approaches a decade-long maximum. Global food security at risk.

In line with the recovery of Upriver wheat shipments, the current campaign is progressively approaching historical averages in its accumulated truck influx. Easily surpassing the 2020/21 commercial year, the current wheat campaign has been steadily gaining ground week after week.

According to official data and shipments’ own shipments, by the end of March about 60% of the wheat to be exported in this campaign should have already been shipped. This way, 2021/22 wheat exports nearly totaled 122,000 MT this week, consolidating total sales of 14.03 Mil MT.

Regarding the commercialization of the next campaign, on Saturday the Ministry of Agriculture, Livestock, and Fishery (MAGyP) announced an expansion of the 2022/23 wheat exports quota by 8 Mil MT, and this way reaching a total of 10 Mil MT. However, during the week no wheat trades were registered for the crop that has not been planted yet.

Meanwhile, in March we started to see the first registrations of 2022/23 forage barley exports. Almost half a million tons were recorded for the campaign beginning in December, thus setting a record for this time of year. Regarding the current barley campaign, forage barley continues to show external sales, consolidating as the best commercial year, and representing more than half of the annual exports of the barley complex.

If we consider malting trades, barley exports would reach a 10-year high, resulting from a robust growth in planted area and production in recent years. An increase in the volume of forage barley sales implies larger bilateral trade with China, the main Argentine customer for this product.

World’s food security at risk

In full planting process of China’s spring wheat, the condition of this crop could be the worst in recorded history of the Asian giant, according to the Ministry of Agriculture of the People’s Republic of China. Although spring wheat represents about 10% of the total wheat production, according to the FAO, a decrease in production is a factor to analyze given the importance of China as a wheat producer.

The Asian giant is the largest consumer and producer of wheat in the world, expecting to harvest about 137 Mil MT in this 2021/22 campaign. This would represent 16% of global cereal production, according to USDA data. China’s imports, of about 9.5 Mil MT, could be increased if their yields fall due to the spring wheat harvest, which at the moment is estimated at more than 13 Mil MT. The condition of Chinese wheat crops could add further pressure on prices.

Furthermore, the sowing prospects for the next spring wheat in the United States is something to be followed closely. The spring crop represents about a quarter of the total wheat production of North American powerhouse.

In a complex climatic context, the level of soil moisture in the spring wheat-producing areas of the United States is decreasing week by week. In the state of Montana for example, water stress has a stronger impact. Although the situation is not so complex in Idaho and North Dakota, which account for more than 70% of the spring wheat production, the lack of rainfall continues to affect these areas, so the situation could worsen in the upcoming weeks.

These two scenarios for wheat production in the United States and China only deepen the uncertainty generated by the Russian-Ukrainian crisis. According to the APK consultancy, grain harvests in Ukraine would fall by more than 54%, due to the impossibility of sowing in many areas where the armed conflict is taking place.

In this sense, though it’s hard to accurately quantify, the conflict on land and port logistic infrastructure in Ukraine is expected to impact strongly. Although at the moment there are no indications that the ports may be structurally compromised, the bombing and fighting have deteriorated the working capital and road infrastructure of Ukraine, which will complicate any future transportation of goods.

The outlook would be even direr if port logistics were heavily damaged, or outright impeded. Andriy Yarmak, an economist at the FAO investment department, stated in an article that without the ports, Ukraine could only export between 10-20% of the agro-industrial products that it had been trading until now.

In this sense, an FAO document warned of some preliminary impacts of this conflict in the trading partners of Russia and Ukraine. The economies that are directly and most affected are Turkey, Egypt, China, and India. Imports of agricultural commodities from these countries from the Black Sea region represent 25%, 23%, 22%, and 13%, respectively, of total commodity imports.

The situation is even more complex around the dependence on Russian and Ukrainian wheat in African countries, with little production of this cereal. All the wheat imported by Benin and Somalia comes from the Black Sea region, while this proportion jumps to 80% for Egypt. In 14 other African countries, more than 50% of wheat is imported from Russia and/or Ukraine. The persistence of this conflict threatens global food security because of decreases in planted areas and consequent falls in production, with the potential to complicate food supply in a wide range of countries.

Source: https://bcr.com.ar/

Photo: REUTERS/Stringer

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