Drought in Argentine Impacting Soy Crop, Prices On The Rise

04.01.2018

Buenos Aires, Argentine's central agricultural province will continue to be impacted by drought for the foreseeable future, according to experts. The area has already been partially affected by a drought since last year and has seen even less rain in the last few week.

According to the National Meteorological Service's data, Argentina's agricultural center got abundant rains during the weekend, but these were barely seen in the Buenos Aires province.

"In most of Buenos Aires, the rains were slight to non-existent. They didn't contribute to relieving the situation” said Natalia Gattinoni, a meteorologist from the Weather and Water State Institute.

Argentina is the world's biggest exporter of soy meal, livestock feed, soy flour and oil. They're also the third largest supplier of raw soybeans, the weather forecasts have significantly impacted the investor outlook for these products.

There are concerns that the country's soy and corn harvest will be limited in 2018 and beyond.

The supply worries have already increased soy prices at Chicago's Mercantile Exchange. In Rosario, where the biggest agricultural port complex is located, soy price rose up to 4,800 pesos (about 260 US dollars) a ton. “Because of the volume of this transaction, this price might have been welcomed by the sellers”, said the Rosario's Chamber of Commerce. They expect to harvest around 54.5 million tonnes of soy.

In the port of Quequen, the price reached 4,550 pesos a ton.

"There is going to be some drought damage, but it's not a disastrous season. The area most affected will possibly be the southwest part of Buenos Aires and (the province of) La Pampa," said Eduardo Sierra, climate adviser to the Buenos Aires Grains Exchange.

By the end of the last year, Argentine farmers had planted 82% of the soybeans expected to be sown in the 2017/18 crop year, according to the Buenos Aires grains exchange. The amount of the remaining seedlings to be completed will depend on fields being moist enough to be planted.


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