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ECONOMY | 15-11-2022 21:28

South America rain offers hope for relief in world food prices

Rain finally fell in Argentina over the weekend and soy farmers started revving up tractors to make up for lost planting time.

Just as agriculture traders fix their attention on South America, rain finally fell in Argentina over the weekend and soy farmers started revving up tractors to make up for lost planting time.

With the soy and corn harvests in the United States all but done, the world is now looking to Argentina and Brazil to see if they can produce enough crops to help ease global food inflation.

Argentina, the world’s biggest exporter of soy meal and soy oil, has seen a vicious La Niña-fuelled drought briefly interrupted. Now farmers who’d been unable to seed on parched fields are set for a planting sprint, analysts at the country’s two top grain exchanges said.

“There’ll be a huge amount of fieldwork this week,” said Cristian Russo, head of crop estimates at the Rosario Board of Trade. “This planting season will progress in bursts that accompany each rainstorm.”

The rains on the Pampas, Argentina’s crop belt, were sufficient to spur two weeks of planting, said Martín López, head of estimates at the Buenos Aires Grain Exchange.

The precipitation comes at the perfect juncture as it allays fears that many Argentine soybeans would be sown after optimum planting dates, or even not at all. But more showers will be needed in January and February when plants are in thirsty yield-defining growth stages.

That’s no sure thing. While La Niña has been expected to fade at the turn of the year, Russo said the latest climate models indicate it may stay strong throughout the first quarter of 2023.

Nevertheless, planting progress over the rest of the month – combined with an outlook for rains in neighbouring Brazil that’ll bolster soy and corn crops there – fans hopes that pressure will ease on global food inflation.

 

Brazil

Brazil puts more breakfasts on kitchen tables than any other nation. It’s the biggest global supplier of unprocessed soybeans, coffee, sugar and orange juice, and the second biggest of corn.

Patchy rains will water most of Brazil’s central crop area this week, keeping soy and corn healthy, while the southern region, more susceptible to La Niña effects, will be mostly dry, posing a risk to planting and germination, according to Marco Antonio dos Santos, a meteorologist at Rural Clima.

Soy planting in Brazil on November 10 was 69 percent complete, against 78 percent last year. In Argentina, it was less than nine percent complete versus 17 percent last year.

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by Jonathan Gilbert & Tarso Veloso, Bloomberg

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