Farmers in Argentina are likely to sow less wheat this year. Due to the expected market conditions, they have found a good alternative in barley. This is partly prompted by fears of government intervention measures. But there is also a good appetite for feed barley on the world market, especially from China.
China normally imports much of its barley from Australia. Trade is affected by political tensions between the two countries. Australia has been sidelined as a barley supplier by China. That creates space for other countries. Previously benefited Canada and France already of this and now Argentina seems to follow suit.
Government in trouble
Earlier this year, Argentinian arable farmers were shocked by a temporary export ceiling for corn. This was introduced by the government in an attempt to keep inflation under control. Plans for an export tax on wheat were scrapped at the last minute after fierce protests from farmers. However, the government remains desperate for money and is committed to keeping food prices low. Farmers therefore fear that there will still be interventions in the wheat market next season. Barley offers more certainty in that regard, because it is not suitable for human consumption.
Last year, Argentina produced more than 17 million tons of wheat on 6,5 million hectares. 4,1 million tons of barley were harvested from 900.000 hectares. Argentina is the tenth largest wheat supplier in the world. Grain is sown in the country in the middle of the year. Reliable area forecasts are not yet available. Several traders expect that the total area of grain will not change much. It is assumed that there will be a significant shift towards barley at the expense of wheat. This could further stimulate the wheat price on the world market. We can benefit from this in the Netherlands.