The USDA slashed its forecast for Argentina’s corn and soybean production in response to widespread drought and raised its prediction for Chinese wheat imports in its April World Agricultural Supply and Demands Estimate.
Argentine corn farmers are now expected to produce just 37 million metric tons for the 2022-23 marketing year, a 3-million-ton drop from USDA’s March report.
“Yield is down month-to-month due to heat and dryness that impacted the late-planted corn, which accounts for roughly two-thirds of area,” USDA’s Foreign Agricultural Service noted in a separate report also released Tuesday. “Temperatures during March were well above normal, with many days above 35 degrees Celsius.” That’s 95 degrees Fahrenheit.
USDA correspondingly cut its forecast for Argentina’s corn exports by 3 million tons to just 25 million for 2022-23.
Soybean production in the country was slashed even more — down 6 million tons to about 27 million in total production — due to the hot and dry conditions. The WASDE also trimmed Uruguay's production, but increases in Brazil's output offset those reductions to a total 5.5-million-ton drop in global soybean production.
While elevated prices in Argentina are slowing down the country’s exports, U.S. trade is flourishing, according to FAS: “Sales to China have surged since the start of March, improving the outlook for U.S. exports and in part supporting higher prices.”
USDA did not raise its forecast for U.S. corn exports in this month’s WASDE, but FAS stressed booming shipments to Mexico in its Grain: World Markets and Trade report.
From September last year through March, “combined shipments and sales of U.S. corn to Mexico reached 13.5 million tons,” said FAS in the report. “This is the third highest level on record, signaling robust Mexico demand for U.S. supplies. Mexico is the largest market for U.S. corn exports, comprising over one-quarter of all U.S. corn exports in 2021-22.”
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U.S. corn trade with the country is currently the subject of a trade spat that could soon rise to the level of a formal dispute. The U.S. Trade Representative initiated a 30-day technical consultations period in March over Mexico's plans to bar the importation of genetically modified white corn for tortillas and other foods; that window closed last week, meaning USTR could announce its next steps at any time.
Meanwhile, USDA gave a large boost to its forecast for Chinese wheat imports in the new WASDE. China is now expected to import 12 million tons of wheat in 2022-23, and that would be more than the country has imported in 27 years.
And a lot of that Chinese business is going to Australia, according to FAS.
“Competitive pricing has prompted China to import large volumes of both milling and feed quality wheat,” said FAS. “Australian wheat is especially competitive following three consecutive years of record crops. China continues to aggressively purchase Australian wheat supplies, with July-February imports up 66% compared to the previous year. Imports from Canada, which supplies hard red milling wheat to the Chinese market, are up 83 percent year over year.”
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