Argentine wheat farmers are preparing for a record harvest, even as global rivals see crop yield prospects cut amid floods in the United States, searing heat in Europe and drought in Australia.
The grain bounty in the world's No. 6 wheat exporter will boost Argentina in global markets, while wheat incomes that will start to flow at the turn of the year will boost whoever wins presidential elections in October.
The country's grains exchanges and analysts predict a wheat harvest of around 21-22 million tons, beating the previous season's record 19 million tons of the crop. Planting is almost complete and has been helped by good weather.
Global rivals, meanwhile, are falling back.
The International Grains Council (IGC) on Thursday cut its world wheat production forecast for the 2019/2020 season by 6 million tons, reflecting diminished crop outlooks in key production areas such as Russia, Europe and Canada.
The U.S. Department of Agriculture (USDA) has also cut back its view of wheat output in Australia, Ukraine, the EU and top supplier Russia. A crop tour this week in the No. 2 U.S. wheat state North Dakota, the top producer of export-dependent spring wheat, found below average yield prospects.
The global market situation should, for the second year running, bolster Argentina, with early-planted U.S. wheat suffering weather problems and Europe in the grip of a heat wave, said Gustavo Lopez, head of the Agritrend consultancy.
This season's exportable surplus destined for North Africa, Southeast Asia, Brazil and elsewhere in Latin America should be as high if not higher than Australia's, where production is suffering from drought, Lopez said.
As global wheat woes have worsened, benchmark futures on the Chicago Board of Trade surged nearly 23% in May and June, the strongest two-month gain in four years, before easing back in July.
Argentina's share of global wheat exports is forecast to grow to 7.7% in the 2019/20 season, an eight-year high, USDA data shows. Russia, meanwhile, will see its share hit a three-year low and Australia will post its second lowest in 12 years.
Argentina - which consumes around 6 million tons of its own wheat domestically - appears to be the stand-out winner, and it could get better still with a favorable weather outlook.
Farmers should also be able to demand a good price.
The 2018/19 Argentine crop saw record wheat yields and commanded a healthy US$ 200 per ton, the most profitable in the last decade, said Pablo Adreani, head of Argentine consultancy AgriPac. The price is now at around US$ 215 per ton.
With this background, 2019/20 sowings will increase by at least 500,000 hectares versus 2018/19, and could reach total production of 23 million tons, Adreani said.
Argentine growers have already planted 96.4% of the 6.6 million hectares expected to be sown with wheat this year, the Buenos Aires Grains Exchange said, compared to the 6.2 million hectares planted the season before.
The Rosario grain exchange expects an even bigger 2019/20 wheat planting area of around 6.9 million hectares.
And we expect better yields, which should result in a record crop of about 21 million tons, said Emilce Terre, head analyst at the Rosario exchange.
Argentine wheat is entering markets beyond Brazil, which remains our historic strategic partner. We hope to get access to other Latin American markets, Africa and Southeast Asia.