Argentina has regained crucial African markets for its wheat by lowering prices, at a time when world-wide production is seen reaching record highs and exports to Brazil have fallen. In the drought-plagued 2002/03 growing season, Argentina's wheat output plunged to just 12.3 million tonnes and exports to African nations dried up.
But these same countries snatched up 2.7 million tonnes of the 2003/04 crop and have already reserved 700,000 tonnes of 2004/05 wheat, which is being harvested now. Argentina is among the world's top five wheat exporters.
"African countries are traditional consumers of Argentine wheat, that is, these markets are already open and they are not difficult to enter," Mario Garcia, a food markets analyst at the Agriculture Secretariat, told Reuters.
Argentina's production rebounded to 14.5 million tonnes in the 2003/04 season and is forecast to increase to 15.1 million tonnes this crop year. As output and shipping costs have risen, Argentine farmers have cut their grain prices to compete.
Argentina's hard wheat is $50 cheaper FOB than comparable varieties in the United States, said Enrique Erize, an analyst at Novitas consultancy. In the past, the price difference was closer to $20.
Argentine sellers have had to lower their prices to make up for higher shipping costs.
"As long as there is such a big price difference, especially with the (US) Gulf, we will keep selling," Erize said.
Argentina is banking on sales to African nations to offset flagging exports to Brazil, where domestic wheat production has risen. The government sees 2004/05 wheat exports to Brazil falling to 5 million tonnes from 7 million tonnes in the past.
Argentina has pinned a great deal of its hopes on Egypt, which has bought a record of nearly 1 million tonnes of Argentine wheat so far. Egypt bought 450,000 tonnes of 2003/04 wheat and 500,000 tonnes of the new crop but didn't buy a single grain of 2002/03 wheat.
Kenya purchased 470,000 tonnes of wheat in the 2003/04 season, Algeria bought 350,000 tonnes, Morocco snatched up 320,000 tonnes, Mozambique purchased 225,000 tonnes and the Democratic Republic of Congo and Nigeria each bought 150,000 tonnes.
South Africa, which was the only African buyer during the 2002/03 season, increased its imports of Argentine wheat to 525,000 tonnes the following crop year and it has reserved 200,000 tonnes of 2004/05 wheat.
But with world-wide wheat output forecast at a record 60 million tonnes, Argentina will have to fight to keep buyers interested.
The US Department of Agriculture puts Argentina's 2004/05 wheat output at 15 million tonnes and forecasts exports at 9 million tonnes, but local analysts predict even bigger numbers.
"Wheat yields are much higher than expected so it's very possible that Argentina will harvest 16.2 million tonnes, but local consumption hasn't grown," Ricardo Baccarin, an analyst with Panagricola consultancy, said.
"So we are going to have to be more aggressive in terms of selling wheat abroad. And the difference today with our competitors is the price," he added.
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