The weather and lower prices lower agricultural expectations in Argentina

Climatic factors and the drop in international grain prices ruin the forecasts of a ‘super harvest’ and extraordinary income in Argentinabut, even so, the result will be much better than that of the very poor 2022-2023 agricultural campaign.

Argentina, one of the world’s largest producers and exporters of grains and derivatives, will have a smaller soybean and corn harvest than initially projected due to the heat wave that occurred in January and February and at a time when international soybean prices Both crops – the main ones in the South American country – are in decline.

In recent days, the Stock Exchange of the Argentine city of Rosario (BCR) cut its projections for the crops of soy and of corn of the 2023-2024 agricultural campaign.

According to new estimates, the soybean harvest will be around 49.5 million tons, up from a previous projection of 52 million tons.

For corn, a harvest of 57 million tonnes is now forecast, up from a previous forecast of 59 million tonnes.

“The expected decrease in performance comes from the heat wavewhich was also associated with the lack of precipitation“, grain market analyst Catalina Ferrari, co-founder of the consulting firm Planifica+, tells EFE.

Although the final result remains to be seen, the harvest will not be a record like the one projected a couple of months ago, but it will not be as bad as that of the 2022-2023 cycle, severely hit by one of the worst droughts that the fertile fields can remember. Argentines and for which the country’s coffers pocketed some US$ 18.5 billion less in exports last year.

Due to the drought, Argentina – which, in terms of soybeans, is the world’s leading exporter of oil, second of flour and third of beans – had a harvest of barely 20 million tons of that oilseed in that campaign, while the country South America – the second largest exporter of corn in the world – was only able to collect 36 million tons of that grain.

Meanwhile, the current downward trend in international grain prices also affects the projection of income from exportsin moments when Argentinawith severe macroeconomic problems, urgently needs a greater inflow of foreign currency.

“We are in a declining market internationally. In the case of soybeans, although Brazil is going to have lower production, it will be compensated by the good production expected from Argentina and Paraguay, so there will be a good supply of soybeans worldwide. In addition, 2 million more hectares of soybean planting are expected in the United States. And this is part of the price drop in recent days,” explains Ferrari.

In the case of cornthe expert points out that “there is a very good supply from the United States, without a great global demand at the moment,” and a good production is expected from Argentina and a harvest in Brazil that, without repeating the record of its previous campaign, it would be above 100 million tons.

“All these factors put negative pressure on international prices, which are accompanied in the Argentine market because a very good campaign is expected compared to what was the previous campaign, despite the latest cuts in projections”indicates Ferrari.

This combination of lower prices and lower than expected production will imply a lower foreign exchange income for Argentina regarding the expectations that were had for the end of 2023.

For example, according to BCR calculations, corn exports for the 2023-2024 cycle would total about US$ 7,657 million, US$ 1,289 million more than the sales of the previous campaign, which implies a growth of 20% in value, considerably less than the expected 53% increase in volume.

In total, according to projections from the Mediterranean Foundation, Argentina’s total gross agricultural exports corresponding to the 2023-2024 campaign could amount to US$37,534 million, US$8,026 million more than in the previous cycle.