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'Painful moment' for Argentina's wine exporters, says Rabobank

Published:  17 February, 2015

Argentina's wine exporters are having a "painful moment" as fast-rising inflation rates make it unprofitable to ship goods, says Rabobank.

However the global bank's latest report shows a few bright spots - namely that exports of Argentinian wine to the UK have grown 5.5% by volume November, with value sales rising 9.3% in the same period.

Argentina saw production decline last year, but had a bumper crop in 2013. This has pushed inventories up 13%, according to the Observatorio Vitivinicola de Argentina which said stocks have grown as exports declined. This stock surplus is affecting pricing and has concerned regional governments who are trying to intervene on behalf of producers. The country is currently struggling with export volumes down 15% in 2014. Although the weaker peso is a boon, rapidly accelerating inflation is proving a major headache - it rose 40% last year, which Rabobank says "raised costs and made it unprofitable to ship goods".

Neighbouring Chile is also facing its own challenges - with a larger than average harvest forecast. This will put additional pressure on pricing as the country is still sitting on "robust" stocks of red wine from last year. Rabobank says that while early to make accurate forecasts for 2015, the Chilean harvest is expected to be "above average".

Meanwhile Australia and New Zealand are expected to bring in average sized harvests. Australia is experiencing "reasonably good growing conditions" although there have been some "isolated adverse weather events". But Rabobank says there is unlikely to be any deviation from the country's five-year average at this point.

As for New Zealand, early indications suggest it will return to a more moderate harvest, after last year's extra large crop.

In South Africa, producers have claimed 2015 marks the earliest harvest in 20 years, with Swartland producer Adi Badenhorst having already harvested his entire crop by last weekend. While last year's production increased by 4% on 2013, there are no official estimates for 2015 available but no major changes are expected.