Argentina Cuts Wheat Export Quota

By CnAgri Print

Argentina has cut the amount of wheat it will allow for export from the 2012-13 crop by 1.5 million metric tons due to disappointing output from the winter crop. According to MarketWatch, the country was expected to be the world's No. 5 wheat exporter this season, according to the U.S. Department of Agriculture, with most of that going to neighboring Brazil. Argentina will likely slip to seventh place now, and a smaller Argentine crop will likely send Brazilian buyers to other markets like North America to sate demand.

In June, the Argentine government said it planned to allow six million tons of wheat exports from the 2012-13 crop, but with the harvest about a third complete, damage from flooding and other problems led the government to trim that to 4.5 million tons, the grain exporter representative said, on condition of anonymity. The representative confirmed a report in local newspaper La Nacion. A spokesman for the Agriculture Ministry didn't immediately return a message seeking comment.

Domestic wheat demand for 2013 is estimated at 6.5 million metric tons, according to the Agriculture Ministry.

Total 2012-13 wheat production is estimated at 11.5 million tons by the ministry, while the Buenos Aires cereals exchange pegs the crop at 10.1 million tons.

The reduction comes as a challenge to Argentina's large grain exporters, who have already bought and committed to exporting five million tons of Argentina's wheat crop and will now see their share of the export quota trimmed to 3.75 million tons, the representative said.

The large exporters, including companies like Louis Dreyfus SA, Noble Argentina, Nidera, Vicentin, and the local units of Bunge Ltd. BG +0.01% and Cargill Inc., that oversold the crop will likely source wheat from other countries to meet their commitments, he said.

Argentina tightly controls wheat and corn exports to keep down local prices. The government only approves exports once it has determined that domestic supply has been set aside.