Brazil is catching up with Argentina as Latinamerica's main producer of wheat. This with the helped of the Argentine administrations of the Kirchner couple. This year Brazil will be planting only 200.000 hectares less than its Mercosur partner which this winter crop is down to 2.75 million hectares.
Brazil has been committed to an aggressive wheat planting policy in the last few years: from 1.81 million hectares in the 2007/08 agricultural year it jumped to 2.42 million hectares this season, according to the country's Agriculture ministry. However the US Department of Agriculture estimate is 2.6 million hectares. The gap therefore is even tighter.
Argentina under the Kirchners has been doing exactly the opposite. From an area of 6 million hectares in 2007/08 it dropped to 4.5 million hectares in the last season and this winter has been even worse. The 2.75 million hectares will the lowest wheat area in 110 years for Argentina. A serious drought in central Argentina plus the tax policy on exports imposed by the Kirchners have generated the massive contraction.
Market analysts believe the 2009/2010 wheat crop will be just enough to cover home consumption, and don't discard the possibility of having to import wheat. Something similar is happening with milk and beef.
Brazil has a domestic consumption of 10 million tons of wheat and has historically been supplied by Argentina. During the last fifteen years Argentina has supplied most of Brazil's imports with a maximum of 7.2 million tons in 2000.
But given the current Argentine administration farm policies, exports from the 2008/09 season so far have only totaled 1.7 million tons.
"Brazil whose dependency on Argentine wheat has always been significant, has seen the volumes reduced considerably lately and has been looking for alternative markets, plus promoting its own crop," said Eduardo Anchubidart from the Buenos Aires Cereals Exchange.
The Brazilian Agriculture ministry has pointed out that the wheat area for this winter crop is showing an important expansion in several states with limited wheat tradition.