The Van Trump Report

Argentina’s “Genetically Modified Wheat” Plans Could Shift Global Trade Flows

Wheat importers are counting on a rebound in production in 21/22 to help ease skyrocketing prices but weather obviously remains a huge wild card. Another potential snag in the outlook for increased supplies is Argentina, which some worry could face export restrictions on its wheat. Argentina last year became the first country in the world to approve the cultivation of a genetically modified (GM) wheat variety, known as HB4. In a controversial move, its biggest customer, Brazil, just approved the sale of flour made from the wheat. However, no other countries have authorized GM wheat for human consumption.        

Argentina’s 21/22 wheat crop is pegged at a near-record 20 MMTs by the USDA, 13.5 million of which is expected to be exported. Brazil, which imports about 60% of its wheat needs, typically accounts for nearly half of Argentina’s wheat exports. Argentina’s total harvested acreage is estimated at just over 16 million (6.5 million hectares), with only about 135,000-148,000 acres believed to be planted with the new GM wheat. While that means the variety accounts for only a minuscule amount of total production, it puts all Argentine wheat at risk of being shunned by importers.

Many may recall in 2013 and 2014, when China turned away all U.S. corn due to the Syngenta AG trait called Viptera that it had not approved. Syngenta originally applied for import approval from China in 2010, but it was not granted until December of 2014, three years after the commercialization of Viptera. Due to cross-pollination and contamination concerns, banned corn included even that from farmers who had not purchased Syngenta seed. 

Argentine grain exporters most recently asked the government to identify farmers that are growing HB4 in order to prevent the GM variety from potentially contaminating exports. Some Argentine exporters have also allegedly demanded a label to put on wheat stating that it is non-GM. According to Bioceres, the 225 HB4 wheat growers are concentrated in the province of Buenos Aires, the country’s top wheat-producing region. HB4 production has allegedly been conducted in a tightly controlled closed-loop system pending Brazil’s approval of the variety.  

Over 200 organizations unsuccessfully pushed Brazil’s biosafety commission, CTNBio, to reject the import and use of GM wheat, including Brazilian flour millers. Brazilian wheat millers association Abitrigo says it opposes approval of genetically modified wheat products for sale in Brazil because it will make imports of the cereal more costly and impact prices on the domestic market. Even though Brazil has now approved HB4, millers have threatened to not buy any wheat from Argentina at all.

Brazil buyers could potentially increase non-GMO imports from other nations, including the U.S., Uruguay, Paraguay, Canada, and Russia. According to industry insiders, Argentine wheat will likely have no trouble finding buyers in Latin America, especially in Colombia, Ecuador, and Peru. They are seeking alternatives to North American supplies this year because of higher prices and reduced supply, so even if Brazil’s millers look to alternative sources, Argentine wheat sellers still have an outlet.

Brazil’s Abitrigo trade group is also concerned about the country’s farmers adopting HB4, even without approval from the government for its cultivation. When the planting of GM soybeans began in Argentina in the late 1990s, producers from southern Brazil ended up buying seeds in the neighboring country and increased the cultivation even before it was approved. (Sources: Argus Media, S&P Global, The Brazilian Report, USDA)

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