Argentina begins wheat sowing amid tax cuts, but area forecast to shrink

Argentina has officially commenced its wheat sowing campaign for the 2026/27 agricultural cycle. This kickoff follows President Javier Milei's announcement of a reduction in export taxes on wheat and barley, effective from June. The measure was revealed during the 172nd anniversary of the Bolsa de Cereales de Buenos Aires (BCBA), the entity that has now declared the start of the planting season.

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The current sowing progress is within historical highs in the PAS series, which responds to adequate water supply throughout the agricultural area.

Despite the government's move to lower export duties from 7.5% to 5.5%, the BCBA has maintained its projection for a 3% decline in the national planted area for wheat. The organization's latest report indicates that 14.2% of the planned area has been sown, a pace that aligns with historical highs for this period, attributed to favorable water availability across the agricultural regions.

The projected area for the current campaign stands at 6.5 million hectares, a decrease from the prior cycle but still 4.8% above the average of the last ten campaigns. The BCBA noted that while sowing has begun early in the southern agricultural areas, the overall acreage dedicated to wheat is lower than the previous year due to increased farmer interest in barley and other forage crops.

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The projected area for this campaign is 6.5 million hectares, reflecting a retraction compared to the previous cycle of -3%, but still above the average of the last 10 campaigns by 4.8%.

This trend suggests that the reduction in export taxes has not yet spurred an increase in wheat planting. The BCBA forecasts wheat production at 21.3 million tons and barley at 5.25 million tons from 6.5 million and 1.35 million hectares, respectively. These figures represent a significant commitment to wheat cultivation within historical context.

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The entire cost structure accelerated at a much higher rate than prices.

Industry experts point to a challenging global market characterized by high volatility in energy and fertilizer prices. Ramiro Costa, general manager of the BCBA, highlighted that WTI crude oil prices have risen nearly 60% year-on-year, while urea costs have more than doubled. In contrast, grain prices have seen only modest increases, creating a widening gap between production costs and market returns. However, Costa also noted that the current global production is expected to be lower than consumption, which could potentially reduce stocks and support prices.

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global production is lower than consumption, which would reduce stocks and support prices.