The decision may spur a broader global discussion about genetically modified wheat as prices rise and concerns grow that more severe weather could threaten food security. Genetically modified (GMO) soybeans and corn have long been accepted on global markets, but are primarily fed to livestock rather than humans.

Brazil’s biosecurity agency CTNBio said its unanimous decision applied only to wheat flour. Millers had threatened to boycott Argentine grains and said they would seek legal recourse to reverse the flour decision.

“The decision was by a technical agency, but it is important to see what the Brazilian market wants. It looks like consumers in Brazil do not want GMO wheat,” said Gustavo Idigoras, head of Argentina’s CIARA-CEC chamber of grains exporters.

Brazilian flour milling association Abitrigo said it would ask the president’s office to convene a national biosecurity committee to review the decision. It said it was also evaluating legal options to suspend the ruling.

The group had already threatened to stop buying Argentine wheat if sales of the drought-resistant wheat were approved in Brazil, vowing to turn to other countries for supplies.

“It could mean a surge in demand for U.S. wheat if they reject buying it if they fear consumer backlash,” said Arlan Suderman, chief commodities economist at StoneX. “Ultimately, it comes down to the consumer. What is the consumer willing to accept?”

U.S. wheat futures hit their highest in nearly nine years on Thursday due to tight global supplies, while European wheat futures climbed to a 13-1/2 year peak.

U.S. Wheat Associates, which promotes U.S. wheat exports, did not have an immediate comment. The group has previously said it will support commercialization only after approval in major markets and the creation of rules for handling low levels of GMO wheat mixed in with non-GMO wheat.

Just a fraction of Argentine farms have tried out the wheat variety resistant to drought and the common herbicide ammonium glufosinate developed by Bioceres SA, whose partner Tropical Melhoramento Genetico filed the request with CTNBio.

A source at Bioceres said it would seek approval from other key markets before seeking to market the GMO wheat commercially.

Some 55,000 hectares (135,910 acres) in Argentina have been planted with the GMO wheat on an experimental basis, company disclosures show.

Argentine grains exporters have asked the government to identify which farmers are growing the GMO wheat so they could stop buying from those areas.

Santiago del Solar, who grows wheat in the bread-basket Argentine province of Buenos Aires, said the ultimate decision remains in the hands of Brazilian millers and consumers.

“It’s fine that the regulators said yes, but we sell wheat to the milling industry and consumers. If they don’t accept GMO wheat, we still have a big, big problem,” del Solar said.

Argentina exported a total of 8.424 million tonnes of wheat through Oct. 19 this year, with some 50 per cent going to Brazil, which relies on its southerly neighbour for most of its wheat imports.

Argentine farmer Francisco Santillan, who also grows wheat in the province of Buenos Aires, said he will wait to see whether other countries approve imports of the wheat variety before he starts planting it.

“I think the reasonable thing to do, no matter how much Brazil accepts it, is to wait a year to see how the issue evolves in other countries that buy wheat from us,” he said.

— Reporting for Reuters by Ana Mano in Sao Paulo, Hugh Bronstein and Maximilian Heath in Buenos Aires and Mark Weinraub and Julie Ingwersen in Chicago.

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For decades, cargo ships have paid tolls directly to the private dredging company in charge of keeping the river open.

Industry executives worry that government intervention in the waterway will heap bureaucracy and extra costs on the grains export sector, which is the main source of hard currency needed to refresh central bank dollar reserves strained by a three-year recession exacerbated by the COVID-19 pandemic.

Grains powerhouse Argentina is the world’s No. 3 corn exporter and top supplier of soymeal livestock feed, used to fatten hogs and poultry from Europe to Southeast Asia.

The National Ports Administration has been given authority over the next 11 months to subcontract management of the waterway, while the transportation ministry evaluates bids from dredging companies for the long-term concession to follow.

“The strengthening of policies on the management of inland waterways is a priority objective of the national executive,” the government said in a decree published on Wednesday.

The tolls paid by ships for dredging services performed by the company that wins the upcoming Parana contract will be received by the newly established agency, the decree said.

“This decree looks like the government does not only want to set up conditions for the tender and the dredging tariff. It looks like an excess of bureaucracy that might mean additional costs for export operations on the river,” said Gustavo Idigoras, head of the CIARA-CEC export companies’ chamber.

“We welcome the idea of having a control agency, but we are concerned about additional bureaucracy and costs. So we need to have close conversations with the government,” Idigoras said.

A transportation ministry source, who asked not to be named, said the new dredging oversight board could actually make it less expensive to ship grains from Argentina.

“The price of tolls paid by cargo ships to the dredging company is something that will be determined in the bidding process. The tolls could end up going down,” said the source. “One of our objectives is to lower logistics costs.”

This is the latest chapter in a long saga of farmers and exporters opposing government intervention in the sector.

The dredging of the Parana gives Argentina an edge over rival exporters Brazil and the U.S., which rely more on less efficient trucks and slow-moving barges.

The new agency has inflamed exporters and farmers already worried about the policies of centre-left President Alberto Fernandez, a Peronist whose administration has curtailed beef exports as a way of controlling domestic food price inflation.

The industry is fretting that if the flow of toll money goes through the state, it would dilute and increase dredging costs.

The river at Rosario is dredged to about a depth of 10 metres, and industry leaders want the next long-term contract to provide for a deeper, wider shipping channel.

— Reporting for Reuters by Hugh Bronstein and Maximilian Heath.

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Trucks owners grouped in the informal TUDA association (Transportistas Unidos de Argentina) began blocking highways last month, making it particularly hard for barley to reach export terminals in the Buenos Aires port of Necochea.

“There were two China-bound Panamax vessels at Necochea port waiting to load. The buyers were worried because they need malting barley by the end of February,” said Argentine barley market consultant Agustin Baque.

“If the strike continued, the buyers would have had to switch to another supplier, like Canada or France,” he said.

China is scooping up millions of tonnes of barley from France, Canada and Argentina to feed livestock, as shipments from China’s usual barley supplier, Australia, have fallen victim to a trade fight between the two countries.

The Argentine drivers were protesting what they called high taxes and highway tolls, as well as low pay and fast-rising fuel costs in the inflation-racked country. TUDA spokesman Santiago Carlucci told local media that the protest had ended.

He could not be reached for comment, but the CIARA chamber of export companies and the Bahia Blanca grains exchange confirmed that the protest had ended.

Argentina’s main agricultural export hub of Rosario was not heavily affected by the truckers’ protest. Local authorities in Rosario did not allow strikers to block roads near the city.

Most of Argentina’s corn and soy, the country’s top two cash crops, are shipped from Rosario. The barley belt is in southern Buenos Aires province, far from Rosario, making Bahia Blanca and Quequen Argentina’s main transit points for the grain.

The strike started bogging down operations at the port on Jan. 19, said Eugenia Rul, head analyst at the Bahia Blanca grains exchange.

“In the affected period, 388 trucks entered the port, equivalent to approximately 11,640 tonnes of grain. In the same period last year, 7,654 trucks entered port carrying 229,620 tonnes. The drop was 95 per cent,” she said.

— Reporting for Reuters by Hugh Bronstein and Maximilian Heath.

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The deal, following a more than 10-hour negotiation session hosted by the Labor Ministry on Tuesday, includes a two-part 25% increase in salaries from January to August. Increases for the rest of the year are to be determined by the inflation rate.

“We have reached an agreement in general terms and that for this reason the strike has ended,” said a statement issued on Wednesday by the SOEA oilseed workers’ union.

“Activities are normalizing as of the start of the first shift of today, and that work schedules at every plant are back to normal,” the union said in the statement.

Andres Alcaraz, spokesman for the CIARA chamber of soy crushing companies, confirmed that plants were back up and running.

Argentina’s oilseed workers’ federation said in a statement late Tuesday that the deal “means the triumph of the strike for a living wage that ensures a dignified life for each worker and their families.”

Chicago Board of Trade soybean futures had been affected by the work stoppage. Workers went on strike over wages that they said did not fully compensate them for Argentina’s high inflation rate and the risk of working during the COVID-19 pandemic. Argentina is a major corn, wheat and soybean supplier.

The strike had affected operations of international agro-giants such as Cargill Inc, Bunge Ltd and Louis Dreyfus Co, and sent soybean prices skyrocketing to six-year highs on the Chicago exchange.

The Urgara union representing port-side grains inspectors continued their strike, which also started on Dec. 9. The labor group is expected to meet with the CPPC private ports chamber later on Wednesday to try to hammer out a wage deal.

“Let’s hope we can reach an agreement” with the companies, said Juan Carlos Peralta, Urgara’s press secretary.

Urgara has a great impact on southern ports of Bahía Blanca and Necochea. However, Argentina’s main agricultural ports hub of Rosario, on the Parana River, uses a lot of non-union grains inspectors. About 80% of Argentina’s agricultural exports flow through Rosario.

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The CIARA-CEC chamber of soy byproduct manufacturers will meet on Tuesday with the two main unions representing oilseed workers to try and hammer out a 2021 compensation package.

“We seek an agreement with the unions that allows the efficient, reliable and safe operation of our factories and ports,” said CIARA-CEC chief Gustavo Idigoras.

Asked how many cargo ships have been unable to load due to the strike, he said: “More than 140.”

The Argentine government, desperate for a deal that would jump-start agricultural exports and revive much-needed foreign exchange inflows, is sponsoring Tuesday’s talks. The negotiations will be overseen by the Labor Ministry.

Both sides in the wage talks accuse the other of intransigence. “We will continue the strike. We are firm in our position,” said Daniel Succi, an official with the SOEA oilseed workers’ union.

CIARA-CEC has offered a 25% raise to come in three phases through August, when another increase through the end of the year would be based on inflation. Workers want a one-shot 25% increase through August.

Argentine inflation was 35.8% in the 12 months through November, according to official data.

Also at issue is a bonus to be paid as compensation for working through the COVID-19 crisis. CIARA-CEC has offered a 70,000 peso (about $840) bonus while the unions say they need a one-off payment of 130,000 pesos, CIARA-CEC says.

In addition to the special COVID-19 bonus, the labor group is demanding that workers’ regular yearly bonus be 35% higher than last year’s bonus, plus a guarantee that workers will be paid for the days they spent on strike.

Members of the Urgara union representing port-side grains inspectors, who negotiate their contracts with the country’s CPPC private ports chamber, have also been on strike since Dec. 9. “We have not had any dialogue. Everything remains the same,” an Urgara spokesman told Reuters.

Argentina is the world’s top supplier of soymeal livestock feed used to fatten hogs and poultry from Europe to Southeast Asia. But few if any soybean cargo trucks have unloaded at port terminals during the strike, bogging down the sector that serves as Argentina’s main source of foreign currency.

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The new swarm is concentrated in the province of Formosa in north-east Argentina, on the Paraguay border. The area is not part of Argentina’s main Pampas grains belt, but it could hurt crops if the low temperatures of the Southern Hemisphere winter do not keep the swarm from spreading too far southward.

“This second wave is in a cattle ranching area where there are not many crops,” Hector Medina, a co-ordinator at Senasa, told Reuters.

The earlier swarm, which entered Argentina from Paraguay in May, has centred in Entre Rios province, closer to Argentina’s main grains belt, but has not done any significant crop damage.

“The swarm detected in Formosa advanced in a southern direction,” Senasa said in a statement. “The wind allowed it to move quickly and is expected to approach Rio Bermejo today. So the alert is extended to Chaco province.”

Argentine agricultural health officials are in touch with their Paraguayan and Brazilian counterparts to monitor the situation, Senasa said.

“If you see locusts, tell Senasa. The more in touch we are, the better prepared we will be,” the statement said.

A month ago Argentina and Brazil said they were monitoring the movement of what was then a 15-square-kilometre locust swarm. The three countries are among the world’s biggest soybean exporters.

— Reporting for Reuters by Hugh Bronstein and Maximilian Heath.

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Argentine officials were in Beijing on Friday finalizing the paperwork needed to ship the country’s livestock feed to China, ministry Chief of Staff Santiago del Solar said in an interview.

The South American country is already the world’s top exporter of soymeal livestock feed.

Beijing in June placed retaliatory tariffs on imports of U.S. soy, which may leave the massive Asian market open to new suppliers of soymeal feed needed to produce the steaks and hamburgers demanded by the country’s growing middle class.

“If the U.S. shifts away from exporting soymeal to China, that’s an opportunity,” del Solar said.

U.S. President Donald Trump said recently he expects more soy exports to go to Europe. But del Solar downplayed worry that the United States will elbow Argentina out of its traditional soymeal markets like the European Union, Vietnam and Indonesia.

“It’s not easy to shift from one market to another,” del Solar said, referring to the new trade routes that the United States may develop due the trade wars. Argentina, he said, is ready to compete thanks to its good export logistics.

Eighty percent of Argentine soy is grown within 300 kilometers (186.41 miles) of the Rosario export hub, with its crushing plants and port facilities ready to take cargoes down the Parana River to the shipping lanes of the South Atlantic.

“The Americans are leaving one market and going to another. But they are not going to double production,” del Solar said.

“It’s like musical chairs,” he added. “You can’t be here and there at the same time.”

If Beijing approves Argentina’s application this year, as expected, Argentina will have a limited amount of meal to immediately send to China due to the drought that hobbled the 2017/18 soy season. But del Solar said he expects farmers to increase plantings from the 17.1 million hectares sown with soy in the recently harvested 2017/18 crop year.

“We expect farmers to plant more soybeans than last year. It’s going to be more,” de Solar said. Sowing starts in October.

Argentina exported a total 28.3 million tonnes of soymeal in 2017, according to official data. About 33.4 percent, or 9.4 million tonnes, went to the EU. The next-biggest market was Vietnam, which imported 3.9 million tonnes of Argentina soymeal, and Indonesia, which bought 2.9 million tonnes.

– Additional reporting by Maximilian Heath in Buenos Aires.

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Perdue said in an interview on the sidelines of the G20 meeting of agriculture ministers in Buenos Aires that the plan would include between $7 billion and $8 billion in direct cash relief.

U.S. growers are expected to take an $11 billion hit due to retaliatory tariffs after Washington placed duties on Chinese goods.

“Obviously this is not going to make farmers whole,” Perdue said.

The program includes cash for farmers of soybeans, sorghum, corn, wheat, cotton, dairy and hogs. It offers government purchases of fruits, nuts, rice, legumes, beef, pork and milk for distribution to food banks and nutrition programs. And it promises a trade promotion program to develop new markets.

Only about $200 million will go toward the expansion of trade missions, Perdue said.

The aid plan, a response to retaliatory trade measures on U.S. farm exports, is intended only for the current crop cycle, he said. “It’s for the 2018 crop. We do not expect to do this over a period of time,” Perdue said.

President Donald Trump announced the program on Tuesday to mixed reactions from U.S. Midwest growers and legislators who said they object to the administration’s tariffs. Trump, however, has made it clear that tariffs are his weapon of choice in trade fights.

China imposed retaliatory tariffs on U.S. soybeans, dairy, meat, produce and liquor after Washington slapped duties on Chinese goods.

The aid will make use of a Great Depression-era program. Starting on Sept. 4 farmers can apply for help. They will be asked to provide data on their current crops.

“We expect the checks to go out in late September or October. As soon as they prove their yields,” Perdue said. “They will be based on actual production, not historical averages.”

Some changes in U.S. crop planning are probably on the way as Washington grapples with some of its biggest trade partners.

“I think we’ll see more corn planted next year rather than soybeans. But that’s not for me to determine,” Perdue said.

“We want people to plant according to market signals rather than government programs,” he added. “There’s no farmer in the United States that would rather have a government check than a good crop at a fair price. That’s what our safety net is all about.”

Perdue grew up on a farm in Georgia. A veterinarian, as well former legislator and two-term governor of that state, he took the helm of the U.S. Department of Agriculture (USDA) last year.

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The dryness that has blighted the Argentine Pampas since mid-November has forced producers to repeatedly slash their estimates for the 2017-18 crop. The light rains that are forecast for the days ahead will not be enough to restore fields baked by an unrelenting Southern Hemisphere summer sun.

“The current season is dead in terms of crop yields,” said German Heinzenknecht, weather specialist with the Applied Climatology consultancy.

“The showers that are on the way are not going to help soy or corn, but they could improve planting conditions for wheat, which starts being sowed in May.”

China’s 2017-18 soymeal exports are set to nearly double to around two million tonnes, traders said on Monday, lifted by lower Argentine supply. Asian countries led by Japan, South Korea and Vietnam are key importers of soymeal.

Argentina is the world’s third-biggest exporter of soybeans and corn, as well as the top provider of soy-based livestock feed, used from Europe to Asia to fatten pigs and cattle.

Sparse showers of about one centimetre (0.4 inch) are forecast for Wednesday in the usually fertile Pampas grains belt, with 2 to 2.5 cm expected on Saturday, Heinzenknecht said.

“You can say, cautiously, that the weather will improve but not with the velocity needed to end the drought.”

Argentine soybean exports are taxed at 28.5 per cent, so the fiscal impact of the drought could be hard as President Mauricio Macri prepares to seek re-election next year while trying to cut the budget deficit and fund infrastructure projects.

The disaster on the Pampas has exerted upward pressure on soybean and corn futures on the Chicago Board of Trade.

Farmers in the U.S. Midwest are scrambling to sell grain that has been held in storage for months to take advantage of prices rallying on Argentina’s woes.

Analysts have slashed their soy crop forecasts, which started the season in the range of 55 million tonnes, to below 45 million.

‘Game almost over’

“It’s really awful around here. Yields are just falling and falling,” said Pedro Vigneau, who operates a 1,400-hectare farm in the central Buenos Aires district of Carlos Casares.

He now expects to harvest two tonnes of soybeans versus the 3.5 to four tonnes that he expected at the start of the 2017-18 crop year.

Vigneau has lowered his farm’s corn harvest forecast to about half of the eight to nine tonnes estimated at planting.

“It might rain on Wednesday but the game is almost over. The impact of the drought will be severe and the area affected is really wide. When you speak with farmers from different areas you realize their fields are almost all in bad condition,” Vigneau said.

Argentine is expected by the Buenos Aires Grains Exchange to harvest 42 million tonnes of soy and 34 million tonnes of corn in the 2017-18 season, down from prior estimates of 44 million and 37 million tonnes, respectively.

“The major area affected by the drought in the central and southern part of the farm belt has no chance of recovering yields, even if it were to start raining,” said Esteban Copati, chief analyst at the exchange.

When the exchange slashed its estimates last week it warned that dry, hot conditions in northern provinces could lead to further reductions.

Temperatures are cooling as the Argentine summer draws to a close, providing some help to parched crops, said Isaac Hankes, a weather research analyst at Thomson Reuters’ Lanworth commodities and weather forecaster. “The rainfall arrival is still about six days out in most regions,” he added.

That would do little to resuscitate the country’s gasping soy and corn fields, according to the Rosario grains exchange.

“Showers are expected in the second half of March, but that’s going to be too late for the most part,” said Emilce Terre, head of research at the exchange, located near the soymeal and soyoil plants that dot the banks of Parana River.

“At this point, it if rains a lot over the next month all it would do is complicate harvesting. It would be unlikely to help soy and corn yields,” Terre said.

— Reporting for Reuters by Hugh Bronstein.

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The plan will see the tax cut by one half percentage point per month for 24 consecutive months.

“The reduction is one of a number of measures taken over the last two years to increase competitiveness and predictability in the sector,” the statement said.

Soon after his December 2015 inauguration, President Mauricio Macri chopped the soybean export tax to 30 percent from 35 percent. He said he wanted to get rid of the levy altogether, but that his government needed the revenue raised by the tax in order to reduce Argentina’s wide fiscal deficit.

The government is also cutting the export tax on soyoil and soymeal, down as of this month to 26.5 percent from a previous 27 percent. Under the plan, the levy on soy derivatives is due to fall to 15 percent by 2020, the ministry’s statement said.

Argentina is the world’s top exporter of soymeal livestock feed and its third biggest supplier of raw soybeans.

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