Wheat and other grains were selling for record prices, just as Uruguayan farmers were deciding what to plant in May and June (our Southern hemisphere winter). So in 2022, it looks like Uruguay will be dedicating more land to wheat than ever before.
Besides the war between Ukraine and #3 wheat producer Russia, #2 producer India finding themselves with their own wheat problems, has suspended exports. In the northern hemisphere, wheat grown in the US and Western Europe has been negatively affected by heat waves.
Why isn’t South America the solution to the global wheat shortage?
Recently, the news wire AFP asked, why isn’t South America the solution to the global wheat shortage?
Well, it turns out that none of the top grain producers in South America rank in the top ten wheat producers.
Brazil is one of the top four food producers in the world however it doesn’t cover its own wheat needs. With a population of over 200 million, it’s actually the eighth largest importer of wheat (87% of which comes from Argentina).
In Argentina (population 45 million) wheat acreage is actually down as some of the major grain areas suffer drought. Farmers often alternate soy and wheat crops. A lack of water means they prioritise soy which is priced even higher than wheat. The rise in fertiliser prices is also affecting production in Argentina.
Uruguay has a population of 3.5 million. In the last harvest, Uruguay harvested almost one million tons of wheat. Local demand is 400,000 tons.
Explosion in the price of wheat coincided with planting in Uruguay
As farmers decided what to sow, not only was world demand high but planting conditions were ideal. May and June were dry and the lack of rain combined with new advanced seeding techniques, planting time this year was quicker than ever according to experts.
As a consequence, land planted with grains and cereals this winter may cover the biggest area ever—more than 700,000 hectares. (What does a hectare look like? See here)
Actual figures will be in in the next couple of weeks but estimates stand around 250,000 hectares planted with wheat, the same amount of canola and 200,000 for barley.
However Uruguay won’t find itself in a different position to other nations. It’s likely that, despite producing more than double the wheat it consumes, Uruguay will need to import wheat too around October.
According to mills contacted by local paper, El Observador, this is not an unusual practice. It will depend on whether exports continue to capture high prices. Mills will likely import from Argentina based on availability, quality and low delivery costs thanks to close proximity.
Sources: El Observador, Blasina y Asociados, farmlanduruguay.com