Wednesday, June 12, 2024

ECONOMY | 10-02-2023 10:56

Argentina’s soy harvest set for 14-year low amid punishing drought

Major losses from harvest anticipated due to ‘worst drought in 60 years’; Forecasts slashed for soy, maize and wheat crops.

The prolonged drought ravaging Argentina as a result of the El Niño weather phenomenon will slash the production of soy, the country’s leading export product, to its lowest volume in 14 years.

The stark warning, issued by the Rosario Stock Exchange, will send alarm bells ringing among government officials. Agricultural exports are a major contributor to Argentina’s gross domestic product and a key source of foreign currency.

Its latest estimate of the next soy harvest, which is exported in grain and oil form mainly to China and India, the Rosario-based forecaster pegs back output a further 2.5 million tons, from 37 to 34.5 million tons. It also lowered its forecast for the maize harvest by 7.5 million tons, from 50 to 42.5 million tons.

In mid-January the body had already estimated losses superior to US$10 billion for the local farming sector, calculating a 23 percent fall in production for the soy, wheat and maize harvests or a total of 28.5 million tons.

Last year, despite the drought, Argentina accumulated maize and soy exports to the tune of US$31.831 billion, 2.5 percent more than in 2021 and a new record, in part because prices "continued their upward trend," according to the Rosario Stock Exchange.

Exports last year totalled US$88.446 billion, according to the INDEC national statistics bureau 

But now soy "continues showing the impact of Argentina’s worst drought in the last 60 years," evaluated the latest report.

The losses cover an area of at least a million hectares, mostly in the provinces of Buenos Aires (301,000 hectares), Córdoba (222,000) and Santa Fe (160,000).

Argentina began 2023 with 55 percent of its extensive territory suffering a lack of water in its soil, according to a report by the SISSA (Sistema de Información sobre Sequías para el sur de Sudamérica) regional drought monitoring agency.

There was some rainfall last month in the main agricultural zones of Central Argentina to alleviate the situation while the national government announced emergency economic measures for the most affected farmers.

Nevertheless, the stresses have returned in early February and "without important rainfall in sight over the next fortnight and undergoing a new heat wave, the sector is again discouraged," highlighted the Rosario Stock Exchange.



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