Argentinian growers may miss Ukraine crisis-driven grain rally

A severe drought and export limits are restricting Argentine farmers’ ability to take advantage of rising wheat and soybean prices, which have surged due to escalating conflict in Ukraine, raising fears about supplies from major European grain producers.

U.S. wheat and corn futures rose to their daily trading limits on Thursday, while soybeans hit their highest since 2012 after Russian forces attacked Ukraine, exacerbating global supply concerns.

“The benefits of price increases due to the military conflict are very limited for Argentina due to the bad harvest in the face of drought,” Gustavo Idigoras, head of the chamber of grain processors and exporters CIARA-CEC, told Reuters on Thursday.

Argentina is the world’s largest exporter of soybean oil and meal, a major supplier of wheat and the world’s second largest exporter of corn.

Idigoras said, however, that there was little wheat remaining authorized for overseas sales due to export limits.

Farmers completed the wheat harvest in early January. Other grains have been hit by drought since late last year, hurting production.

Argentina’s 2021/22 wheat production reached 22.1 million tonnes, according to official figures, but farmers have already sold 15.5 million tonnes of the grain and domestic demand for wheat is 6 million tonnes.

Idigoras said that with export limits to ensure local supply “we have very little left, less than 1 million tonnes, with which we will not be able to take advantage of any price benefit or price shift from Ukraine.”

Russia and Ukraine are the two largest global suppliers of wheat, with a combined total of 29% of world exports.