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ECONOMY | 17-01-2023 16:31

Drought-busting rains come too late to salvage Argentina's soy

Rains heralding the end of the devastating La Niña drought may come too late to prevent Argentina's soybean crop from withering.

Rains heralding the end of the devastating La Niña drought may come too late to prevent Argentina's soybean crop from withering and ending up as the smallest in 14 years.

The La Niña weather phenomenon is easing into a more neutral weather pattern, but it is doing so at a slower pace than previously thought. Rains that were forecast for late January are now expected weeks from now, too late for relief for Argentina's soybean and maize crops that require more water in February, the heart of summer in the southern hemisphere. The soybean harvest occurs in the second quarter.

"While rains are expected to return in the coming months, alleviating the soil situation in the 2023/24 season, they will not improve the current production cycle," the Buenos Aires Grains Exchange said in a report. The Rosario Stock Exchange said it expects rains to normalise closer to April.

Argentina is the world's largest exporter of soybean meal and oil and the world's third-largest supplier of corn. The US Department of Agriculture sharply lowered its projections for the country's soybean and corn production, warning of the possibility of further reductions. Argentine authorities are closely monitoring crop forecasts, as agricultural exports are crucial to the country's economy.

The Rosario Stock Exchange cut its forecast for a key triangle of the La Pampa growing region by 46 percent. Government weather maps released on Monday showed rainfall bringing around 50 millimetres to the triangle over the next week. However, global models forecast below-average rainfall in the longer term through February and March.

by Jonathan Gilbert, Bloomberg

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