Yahoo TV

STORY: Drought is only the beginning of worries for wheat growers like Juan Francisco Arregui in Argentina’s breadbasket farmlands.

"This season for wheat is complicated.”

Standing in a dusty field that hasn’t seen rain in two months, Arregui and other farmers are also concerned about spiking fertilizer costs and political uncertainty over export rules…

a situation that is leading farmers in the world’s sixth top wheat exporter to switch to soy.

Arregui: "In our particular case, we'll sow more soy because of the simple reason that its sowing cost is a lot lower and it has less risks attached. The costs of corn and wheat are bigger."

That’s bad news for global grain markets still reeling from Russia’s invasion of Ukraine – both major wheat exporters – that have snarled global supplies and pushed up prices.

Many hope markets like Argentina, which had a record 2021-2022 wheat harvest of some 22.4 million metric tons, can step in to fill the shortfall, but that looks unlikely with a sharp production drop expected.

Cristian Russo is the head agronomist at the Rosario Grains Exchange, which has warned about the worst wheat planting conditions in 12 years.

"Today anything that goes wrong with wheat is more important and means greater losses. That is what we are seeing."

The exchange says sowing of the grains has been stuck at 65% due to draught that meteorologist Leonardo De Benedictis says won’t let up soon.

"In the short term, the rain trend is still very scarce, we don't have any large precipitation events. There might be some isolated phenomenon, but in reality, we continue with the pretty dry weather pattern."

In addition to upending the global grains trade, sparking food security concerns and causing sky-high inflation, the Russian invasion of Ukraine has also exacerbated the price of fertilizer shoot-up – with Russia a major global supplier – impacting farmers all over the world.

Arregui has seen fertilizer prices more than double compared to last year.

“Phosphorous is around $1500, $1600 dollars the tonne. Last year it was $550, $600 or even $700 dollars.”

Concerns over government intervention also loom large, with authorities keen on reining in domestic inflation of 60%.

Argentina has kept a lower cap on wheat exports than last year, raised export tariffs on soymeal and oil and threatened the same for wheat, though lacks congressional support to do so.