Argentine wheat flour exports slump since May

Buenos Aires, July 2nd. According to Argentinean Census and Statistics National Institute (INDEC)  during May, wheat flour export reached 50,251 tons, 17% below the same month in 2017 and also 17% below 2018 April exports. That was the first month in the year that wheat flour exports down respect the last year.

Sources of in the milling industry are concerned because this couldn’t be a temporary phenomenon but a structural one. Indeed, during June solicitudes to export wheat flour were down to less than 35,000 tons, the minor volume since December 2015.

“Now, we forecast that exports will down 1 or 2 percent respect to 2017”, say our sources. Since 2013, when Kirchner’s Administration imposed a ban on wheat and flour exports, wheat flour exports had rising year after year, until reach 700,000 tons in 2017. But this year the growth could be stopped. Local milling industry has two bigger customers abroad: Brazil and Bolivia. Both countries bought 95% of Argentinean flour during 2017. “We have not competitiveness exporting by ship to overseas markets; only can supply foreign demand carrying the flour by trucks. This is the reason because we only supply bordering countries”, explain from the industry.

Source: RIA Consultores on INDEC basis

But wheat flour FOB prices increased dramatically along 2018, and this was the reason that stopped exports. For example, FOB prices to Brazil raised from an average of 251 dollars per ton in January 2018 to 347 dollars in May 2018, i.e. a 38% increment.

“There is a serious contradiction in the local wheat value chain because milling industry is not capturing the larges wheat surpluses since 2015/16 season, that derived in huge grain exports that reached 13 million metric tons in 2017 from 4.5 MMT in 2015, before Macri’s Administration”, says RIA Consultores’ report.

In dialogue with, Rene Mangiaterra, chairman of Molino Matilde (Santa Fe Province), explains that overseas wheat exports had cut the stocks to local millers, increasing wheat prices. “When stocks are down, local wheat prices trend to be the same that Gulf plus a 10% of Import Tax from extra-Mercosur origin. This situation disloged both Argentinean millers as Brasilean importers”, said Mr. Mangiaterra. Also currency depreciation in both countries brought uncertainty for customers and suppliers. “Now we are expecting how evolves this situation”, confess Mangiaterra.


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