beyondbrics

Argentine farmers, their fields parched, are obsessed with just one thing at the moment: rain. When it will rain. How much it will rain. And how much of their production – especially of corn – they can salvage if it does.

Rains did come on  to some affected areas and a large swathe of Argentina’s farming heartland is forecast to get a stormy front late on Tuesday, bringing relief to a sector hard hit by the La Niña phenomenon. 

“This rain is crucial,” Esteban Copati, an analyst at the Cereals Exchange, told beyondbrics. What farmers need, he says, is continuous rainfall and until it is clear whether that will happen, it is too early to put a figure on losses.

But serious losses there have been, especially in corn but also in soya. Rainfall now, Copati says, will serve to “lessen the losses” rather than turn back the clock. Farmers can still sow their late corn and soya crops until around January 15 in the case of corn and a week later in the case of soya, but some land and production has already been irrevocably lost.

“Without a doubt, we’re going to be a long way from the 28m tonnes (in corn) we had forecast. We could now be thinking of 24m to 25m as a ceiling, and down from there. It depends on what happens with the weather,” Copati says.

The Commodity Weather Group, which monitors the weather’s impact on commodities, said in a report that rains in the provinces of La Pampa and south-central Buenos Aires had helped, and rain was expected in Santa Fé though to a lesser extent in Córdoba.

This will  lead to up to two-thirds of the corn and soya seeing some rain, but more notable amounts of better than 0.5 inch of rain should fall only in around half of the (agricultural) belt. This will likely leave nearly half of the corn and at least 40 per cent of the soyabeans with only limited relief or none at all.

Farmers are due to meet government officials on Thursday, though Norberto Yauhar, the agriculture minister, has played down comparisons with the severe drought which hit Argentina in 2008, and urged farmers to “be less dramatic”. He has promised aid from cash already budgeted rather than set up special funds for producers.

That did not go down well with farmers, who fear widespread losses – as much as $3bn in soya, with production down to some 45m tonnes from 52m, and nearly a quarter of the corn crop lost.

Argentina’s farm sector is the country’s biggest moneyspinner, bringing much needed dollars flowing into state coffers. As the capital prepared for storms to punctuate the stifling near 40-degree centigrade heat on Tuesday, the government, too, will be praying for the rains to last to avoid economic headaches.

Related reading:
Argentina’s new year tariff hikes, beyondbrics
The weather: La Niña rolls in for a second round, FT
Argentina’s Lorenzino presents budget, dodges bullets, beyondbrics