Brazil has become the first country to allow imports of flour made with genetically modified wheat, though shipments of the new variety developed in Argentina are unlikely anytime soon due to opposition from Brazilian millers and global consumers.
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.
Review Of Decision
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 US 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?"
US 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.
US Wheat Associates, which promotes US wheat exports, did not have an immediate comment. The group has previously said it will support commercialisation 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 Genético 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 19 October this year, with some 50% 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.