Argentina’s ‘unprecedented’ drought hits farmers, economy

A historic drought hitting Argentina’s crops is deepening the grain export giant’s economic crisis, devastating farmers in the Pampas region, raising fears of default and jeopardizing targets agreed with the International Monetary Fund (IMF).

The country, which is the world’s biggest exporter of processed soybeans and third-largest in corn, is experiencing its worst drought in more than 60 years, which has led to repeated sharp cuts in soybean and corn harvest forecasts.

Projections were revised downwards again on Thursday by the Buenos Aires grain exchange, after the Rosario exchange cut its soy production outlook to 27 million tonnes, the lowest since the turn of the century.

“We are facing an unprecedented climate event,” Julio Calzada, head of economic research at Bolsa de Rosario, told Reuters, adding that farmers face losses of US$14 billion and 50 million tonnes less soy bean production. , corn and wheat.

“It is unheard of for all three vintages to fail. We are all waiting for it to rain,” she added.

The drought is a hard blow for Argentina. It comes as the country prepares for general elections in October, is grappling with 99% inflation and is grappling with local and international debt payments to bondholders and the IMF.

With grains the country’s main export, plans to rebuild depleted foreign exchange reserves are stalled, leading to talks with the IMF to loosen reserves accumulation targets for the year. Analysts also cut the GDP outlook.

Grain exchanges have warned that forecasts for soybeans and corn could fall further if it doesn’t rain. The forecast for soybeans from Bolsa de Rosário is already at the lowest level since the 1999/2000 season and the yield expectation is the worst since 1996/97.

“From what we expected (at the beginning of the campaign) to today’s situation, I don’t know if we’re going to produce half of that,” said Miguel Calvo, a soybean producer in the central province of Córdoba.