Production:

Wheat is Chile's most politically important crop. There are an estimated 46,000 producers of wheat in Chile, of which 87 percent plant less than 50 hectares of wheat and produce just 22 percent of the total output. It is estimated that over 40,000 of Chile's small farmers are at the subsistence level with little or no alternative crop production. While nearly 550 farmers produce 50 percent of Chile's overall wheat production and around 5,000 are considered the medium size producers.

One of the most important factors in determining the area of wheat to be planted each year is the previous year's market prices, followed by weather conditions and prices and demand for alternative crops like barley and oats.

Chile's total wheat planted area increased in MY 2014/15 when compared to the previous MY in spite of falling wheat prices, mainly because a large number of farmers who plant wheat also plant oats and barley. These producers had numerous problems with contracts for these grains planted (barley and oats) during the MY2013/14 production season, thus they decided to plant wheat. Additionally, winter and spring wheat also enjoyed favorable weather during the MY 2014/15 planting season. Our figure in the PS&D for the planted area in MY2014/15 is the official figure given by the Ministry of Agriculture, which is lower than the USDA official figure. In addition, the production estimates noted in the PS&D for MY2014/15 are also the Ministry of Agriculture's (MOA) figure, which post believes are sound estimates, as the MOA has already taken a preliminary survey of farmers production levels.

Based on post discussions with industry contacts, current predictions show that planted area for wheat in MY2015/16 is expected to be smaller than the previous year as producers have the alternative of other grains again, as they resolved with the industry the contracts signed every year. The industry promised to honor contracts for the alternative crops and domestic prices for those alternative crops are expected to be higher this year.

Consumption:

Total human consumption of wheat has been rather stagnant and in line with population growth during the last few years. According to the local bakery association, FECHIPAN, Chileans consume an average 80 kilos of bread per capita per year, making them the second largest consumers of bread in Latin-America next to Mexico. Approximately 25,000 persons are employed by the milling and bakery industry.

The milling industry is Chile's main wheat destination. An estimated 85 percent of Chile's total wheat supply (domestic production plus imports) is milled for flour. An estimated 80 percent of wheat flour is sold directly and produced by 71 milling facilities nationwide.

Trade:

Post revised the import figure for MY2013/14 down to 764 KMT, which is significantly lower than the previous MY when 928 KMT was reported. The 764 KMT figure is an actual final official import figure provided by the Ministry of Agriculture (MOA). For MY2014/15 imports are expected to be slightly larger than the previous MY in spite of a slightly larger expected output. Industry sources report that the nominal increases in imports are because the government and private sector would like to increase their stock levels slightly.

Domestic import decisions are normally driven by price followed by quality, but sometimes price and/or quality take a back seat when a shipload needs to be filled. Under these conditions a higher price may be paid and/or a lower quality accepted for the remaining portion of the shipment. Consequently, although you would expect importers to get wheat from a U.S. supplier when a higher quality product is sought, the supplier in a third country, even with a lower quality product might get the sale.

Canadian exports of durum wheat positively competed with U.S. wheat in CY 2014, thus there were no U.S. wheat export to Chile during that period. At the same time, Argentine wheat exports to Chile dropped in 2014 due to an export ban imposed by its government.

Production, Supply and Demand Data Statistics:

Wheat

2013/2014

2014/2015

2015/2016

Market Begin Year

Dec 2013

Dec 2014

Dec 2015

Chile

USDA Official

New post

USDA Official

New post

USDA Official

New post

Area Harvested

255

255

270

263

0

255

Beginning Stocks

262

262

108

184

0

199

Production

1,360

1,358

1,620

1,430

0

1,360

MY Imports

770

764

900

800

0

850

TY Imports

841

750

900

750

0

800

TY Imp. from U.S.

536

519

0

500

0

500

Total Supply

2,392

2,384

2,628

2,414

0

2,409

MY Exports

9

0

10

0

0

0

TY Exports

12

0

10

0

0

0

Feed and Residual

125

100

150

100

0

100

FSI Consumption

2,150

2,100

2,175

2,115

0

2,125

Total Consumption

2,275

2,200

2,325

2,215

0

2,225

Ending Stocks

108

184

293

199

0

184

Total Distribution

2,392

2,384

2,628

2,414

0

2,409

1000 HA, 1000 MT, MT/HA

Source: Ministry of Agriculture, National Institute of Statistics, Producers, Traders, Millers.

Import Trade Matrix

Country

Chile

Commodity

Wheat

Time Period

Jan-Dec

Units:

M.T.

Imports for:

2013

2014

U.S.

703,450

U.S.

316,630

Others

Others

Canada

191,171

Canada

457,915

Argentina

40,582

Argentina

6,971

Uruguay

4,199

Paraguay

84

Peru

6

Mexico

23

Peru

5

Total for Others

235,958

464,998

Others not Listed

0

0

Grand Total

939,408

781,628