by PressArgentina’s soybean crop may be the lowest in 15 years
Argentina’s soybean crop hit by drought
The USDA presented the forecast for the agricultural market of various countries for the 2022/2023 marketing year. According to the forecast, Argentina’s soybean crop is expected to decline to its lowest level in 15 years. The drought, which is expected to continue for a long time, will be the reason for the reduction of the oilseed crop.
The USDA estimates that Argentina’s soybean harvest will be 36 million tons, compared to the ministry’s previous estimate of 9.5 million tons more. If analysts’ forecasts are correct, the country’s production will be the lowest since the 2008/2009 season, when the crop totaled only 32 million tons.
At the same time, experts note that the rains observed in early 2023 helped improve the basis for the production of a second crop. However, a significant increase in crop production will require more rainfall throughout the ripening period than the average rainfall observed at that time.
The USDA believes that Argentine farmers have every opportunity to increase production. One is that the second crop will make up for the poor performance of the first. However, weather conditions play a critical role, and so far the combination of high temperatures and lack of moisture does not allow for a favorable forecast.
Many agricultural areas in Argentina are already suffering from drought, particularly the difficult situation in the province of Entre Rios.
Analysts believe that in 2023 the influence of climatic conditions will be the main factor in changing the price of soybeans. The effects of high inflation will be amplified by the drought, which will provoke an even greater jump in the cost of beans. In addition, experts do not yet see a positive impact on the market from the easing of monetary policy by many regulators.
The Argentine Grain Exchange released its forecast for soybean production. It was lower than the USDA estimate — to 34.5 million tons. Previously, experts had expected production to reach 37 million tons. If the current data proves to be true, the world market will be faced with increasing demand and limited supply.
Argentina is the leading supplier of soybean oil and meal, but the severe drought could change the picture. Experts believe that Brazil, where bean production is at a record high, could take the place of Argentina as an exporter. This country could become the main supplier of soybeans to China. According to analysts, the price of Brazilian soybeans is lower than that of U.S. products, which have traditionally been sold to China. There is a possibility that the Chinese authorities will abandon U.S. export contracts in favor of Brazil. The situation will depend on many factors, including supply and demand in the world market.