Argentina: Drought after Flood

Commodities , Food , Soybaens Jun 26, 2012 No Comments

Soybean seedOne month after the southwestern province of Buenos Aires, the heart of the Argentine agricultural power, has been under water, Argentina is now facing a drought, leading analysts to revise soybeans production forecast down.

The Ministry of Agriculture estimates the soybeans production at 42.9 million tons this year, but professionals from Bolsa de Comercio de Rosario, the Rosario Board of Trade, and the first international port for soybeans, are more pessimistic. They expect around 40.5 million tonnes, against 52 to 53 million tons forecasted in spring.

As Argentina is the world’s leading supplier of flour and soybean oil, and the third in soybean seed, drought may affect food prices.

The effect would be less on corn, as the market is oversupplied. La Niña related drought is not a new phenomenon, but the weather is expected to be particularly dry this years in Argentina. This is also the winter wheat season in the southern hemisphere, and the fields are not irrigated. The Argentine government,which limits exports in the name of national food security, plans to export this year 6 million tonnes of wheat out of about 12.5 million tons produced, vs. 14 million tonnes last year.

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Pascal Blanc

Pascal has implemented numerous software solutions in the areas of procurement, sourcing, spend management, supplier evaluation and performance. His clients include Fortune 500 companies in Europe, Asia and North America. He is a co-founder of Source & Procure.

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