Agricultural Commodity Markets in Argentina
With 2.8 million square kilometers of national territory, Argentina is the eight largest nation in the world and the second largest in Latin America, after Brazil. In terms of population, Argentina represents the fourth largest country in Latin America with approximately 44 million citizens. Throughout the last decade, Argentina was particularly struck by the global financial crisis and the ensuing rollercoaster of international commodity prices. Furthermore, during the same time period, Argentina lost access to major global financial markets and saw its government involved in serious corruption scandals. In fact, since 2007, Argentina’s government has had to procure approximately US$20 billion in additional financing and loans from the People’s Republic of China in order to keep its economy going. However, the rocky relationship between Argentina and the global financial markets is currently changing due to the policies of the Macri government, which took office in December 2015. This article explores the status of commodity markets in Argentina.
Agricultural Commodity Markets in Argentina
In spite of unfavorable weather variations, Argentina’s agricultural industry has had a productive year. During 2016/17, Argentina is expected to produce some 15 million tons of wheat, of which approximately 9 million are bound for export markets. While Argentina’s main trade partners are Brazil, China, and the United States, the top three exports markets for Argentine wheat are Brazil, East Asia, and West Africa. Furthermore, in January 2017, the government of Argentina passed legislation that seeks to incentivize agricultural exports by providing a tax rebate between 3.0% and 4.0% on wheat destined for international markets.
Barley production in Argentina is estimated to surpass 3 million tons during 2016/17, with more than 800.000 hectares within the country being dedicated to this crop. Meanwhile, barley exports are expected to reach, at least, 1.2 million tons during 2016/17. Throughout the last several years, more than half of Argentina’s barley production has been focused on the Andreia variety, while the Scarlett variety has accounted for another 40%. Today, the local market price for a ton of barley ranges from US$135 to US$150. In terms of international trade, Argentine barley is mainly exported to Brazil, Uruguay, Saudi Arabia, India, and Vietnam.
Similarly, corn production in Argentina during 2016/17 is forecast to reach 36.5 million tons, mainly throughout the regions of Cordoba, Santa Fe, and Buenos Aires. Most of the Argentine corn production is destined for export and averages more than 20 million tons exported annually. Currently, the market price per ton of corn is ranging between US$150 and US$170. Another important commodity crop in Argentina is sorghum and production for 2016/17 should reach approximately 3.5 million tons. Out of this production, some 600.000 tons of sorghum are forecast to be exported, mainly to Chilean and Japanese markets. Finally, Argentina is expected to produce over 1 million tons of rice during 2016/17, mainly in the provinces of Entre Rios, Corrientes, and Santa Fe.