The Buenos Aires Grain Exchange has estimated that $14 billion in exports will be lost due to the severe drought the country has been suffering since the winter of 2022, which has affected wheat, soybean and corn production.
The projection was made in the institution’s first webinar of the year in which it analyzed the progress of the 2022/23 campaign.
This was underlined by the director of agricultural estimates of the Cereal Exchange, María Cecilia Conde the lack of water reserves and surface humidity conditioned the progress of the plantingpredominantly in the center of the agricultural area, leaving out 900,000 hectares of soybeans and corn in the current campaign. As regards the area already planted, the sowing of early corn – with losses of up to 40% – and the sowing of soybeans were strongly affected.
With the soybean planting window closed and where yields are being finalized in 31 percent of the planted area, the entity estimates 38 million tons, 10 million tons less production than originally forecast.
Corn, for its part, production estimates have been reduced by 5.5 million tons from initial estimates and now project 44.5 million tons.
Of all the rents collected, sunflower is the one with the least negative impact.
Regarding the cultivation of grain, sand recorded a drop in production of around 45% compared to the previous campaign and dropped to 12.8 million tons achieving the lowest returns since 2008/09.
In this context, the economist Ramiro Costa highlighted the resulting economic impacts. Costa highlighted that we are beginning to see signs of improvement in some variables of the world economy, the reopening of China and the continuity of the agreement on cereals in the Black Sea which, even when stocks are adequate and prices are at high levels, will not there is I am at most registered.
Costa highlighted the impacts on the wheat supply chain, predicting a drop in exports of around 55% compared to last season, which implies a 3,000 million dollar decrease, and a 36% drop in the contribution to the gross product. For corn, exports are expected to decrease by 21%, or a decrease of 2,160 million dollars less, with a contribution to the economy of 3,600 million less dollars.
Given the importance of the soy supply chain, the impacts on it are those that carry the greatest weight. Lower production reduces gross soybean product by $5.8 trillion from last season (26%), a decline in exports of $4.5 trillion, and the harvest would be affected by $2.3 trillion.
In summary, the impacts that drought would have on the contribution of the sector in the current scenario are an interannual decline of US$ 12,245 million in gross agro-industrial product (23%); a reduction in exports of almost 10 billion dollars (3%) and a decrease in turnover of 19%, or 3,314 million dollars. However, he stressed that the impact could be even greater if rainfall does not return to normal in the rest of the campaign and the risk of early frosts becomes real given delays in planting progress. Thus, exports of 14,000 million dollars could be lost.
Finally, Ramiro Costa stressed that these climate scenarios highlight the importance of having public policies that accompany the sector. If a rapid recovery of agro-industrial activity is to be achieved, measures will be needed aimed at reducing the tax burden, with a gradual reduction of export duties, improving infrastructure, financing, developing and adopting technology and access of our products to international markets.
Source: Clarin
