South American rains.. and the global food market
As agricultural commodity traders focus their attention on South America, it finally rained in Argentina this past weekend, and soybean farmers began trying to get their tractors back on track to make up for lost planting time. With soybean and corn crops running out in the United States, the world is now looking to Argentina and Brazil to see if they can produce enough crops to help ease global food prices.
Argentina was the world’s largest exporter of soybean flour and soybean oil, but it experienced a fierce drought fueled by the El Nino or Southern Oscillation (an irregular periodic change in winds and temperatures in the Pacific Ocean). Analysts at the two largest grain exchanges in the country said that farmers who could not plant seeds in the barren fields are now rushing to plant their fields.
“There will be a massive amount of work in the fields this week, as this planting season picks up progress with every rainstorm,” said Cristian Russo, head of crop estimates for the Rosario Board of Trade. Martin Lopez, head of crop estimates at the Buenos Aires Grain Exchange, said the rains in the pampas (Argentina’s crop belt) were enough to stimulate planting for two weeks.
The rains come at the perfect time, as it allays fears that much of Argentina’s soybean crop may be planted after optimal sowing dates, or not at all. But more rain will be needed in January and February when the plants are in the water-hungry stages of growth, which determine the size of the crop. However, this is not certain.
While El Niño was expected to fade at the start of the year, Russo said, the latest climate models indicate that it may remain strong throughout the first quarter of 2023. However, progress in agriculture during the rest of the month, along with rainfall forecasts In neighboring Brazil, which will boost soybean and corn crops there, there is hope that pressure on global food inflation will ease. Brazil contributes more breakfast crops than any other country. It is the world’s largest supplier of soybeans, coffee, sugar and unprocessed orange juice, as well as the second largest supplier of maize.
Intermittent rains are expected to irrigate most of Brazil’s central cropping region this week, keeping soybean and maize crops healthy, while the southern region, which is more vulnerable to the effects of El Nino, will be mostly dry, posing a risk to planting and germination, according to Ma. Marco Antonio dos Santos, a meteorologist at Rural Kilma, said. On November 10, the rate of soybean cultivation in Brazil was 69%, compared to 78% last year. In Argentina, the rate was less than 9%, compared to 17% last year.
Jonathan Gilbert and Tarso Veloso*
* Journalists at Bloomberg
Published by special arrangement with the Washington Post Syndicate.
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