Already struggling with galloping inflation, the South American country is facing a drop in cereals, its main export.
A historic drought ravaging Argentina’s crops has deepened the grain-exporting giant’s economic crisis, intensifying fears of default and jeopardizing agreed targets with the International Monetary Fund (IMF).
The South American nation, the world’s largest exporter of processed soybeans and the third-largest source of corn, is in the grip of its worst drought in more than 60 years, which has led to repeated sharp declines in crop forecasts.
Those forecasts were slashed again on Thursday by the Buenos Aires Grain Exchange after the Rosario Exchange cut its soybean production outlook to 27 million tonnes, the lowest since the turn of the century, when much fewer crops were harvested. have been planted.
“We are facing an unprecedented climate event,” Julio Calzada, head of economic research for the Rosario stock exchange, told Reuters.
He added that farmers, especially in the fertile Pampa region, were facing $14 billion in losses as their production was expected to be around 50 million tonnes less for crops of soybeans, maize and wheat.
“It is unprecedented that all three crops fail. We are all waiting for the rain,” he added.
The drought is a blow for Argentina. With the October general election approaching, the country is already grappling with 99% inflation and a wall of local and international debt repayments to bondholders and the IMF.
Grain is the country’s main export and faltering harvests are blocking plans to replenish Argentina’s depleted foreign currency reserves.
This, in turn, prompted talks with the IMF to relax reserve accumulation targets for the year. Analysts have also downgraded the outlook for the country’s gross domestic product (GDP).
“The situation is dramatic,” said Luis Zubizarreta, president of the Chamber of Commercial Ports and the Soy Industry Association. “This has an impact on the whole economic situation of the country and on foreign currency earnings at a very critical time for Argentina.”
He added that the flow of grain into ports was at historically low levels “because there is no cargo”.
The drought affecting Argentine farmers, exacerbated by high temperatures linked to climate change, dates back in some regions to May 2022. The country suffered at least eight heat waves during the 2022-2023 season.
Grain exchanges have warned that forecasts for soybeans and corn could drop even further if no rain comes. The Rosario exchange’s soybean forecast is already at its lowest since the 1999-2000 season and the expected yield is the worst since 1996-1997.
“Based on what we expected at the [start of the campaign] in the current situation, I don’t know if we will produce half of it,” said Miguel Calvo, a soybean farmer in the central province of Cordoba.
“I thought all the ills were over and the last eight to ten days have been the final blow due to the heat and lack of rain.”
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