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Argentine Farmers 'Sailing Without A Compass' Amid Political Uncertainty, Dry Weather

Published on Sep 20 2019 12:05 PM in Supply Chain tagged: Corn / Argentina / weather / Soy / World News

Argentine Farmers 'Sailing Without A Compass' Amid Political Uncertainty, Dry Weather

Unusually dry weather is making Argentine farmers nervous as they wait for October rains to revive parched corn crops, adding to uncertainty around next month's presidential election that could see business-friendly incumbent Mauricio Macri lose power.

Growers, many of whom are concerned at the prospect of the left returning to power in the 27 October general election, started planting corn this month. They have begun to worry that dryness might hobble this season's crop and cut into wheat yields.

"We are sailing without a compass and in the mist," said Francisco Santillan, a grower in the bread-basket town of Pergamino, Buenos Aires province.

Alternative Measures

Farmers had already started turning to soy over more expensive corn as a way to reduce risks after left-leaning challenger Alberto Fernandez's emphatic victory in primary elections last month sent the peso currency into a tailspin.

The sight of corn stalks frying in their fields could induce more farmers to lean toward soy, which will start being planted next month when new rains are expected.

"That's an alternative," said Daniel Chiesa, a farmer in the drought-hit town of General Villegas in western Buenos Aires province.

Fernandez's vice presidential running mate is Cristina Fernandez de Kirchner, a former president who feuded with growers over her implementation of strict grains export limits, high taxes on international shipments and currency controls.

Growers fear that those policies, which they say killed farm profits, would return if Macri fails to get re-elected.

A 'Difficult' Situation

"Nerves are getting frayed. The weather is complicated and so is the political climate," said German Heinzenknecht, weather specialist with the Applied Climatology consultancy.

"The situation is difficult because of two factors: the flowering of wheat plants and corn planting. If it does not rain by Oct. 15, it's going to get bad. So, on top of the political situation, everybody will be talking about the weather."

The driest areas are in La Pampa, Cordoba, western Buenos Aires and Santa Fe provinces. These areas account for 60% to 70% of Argentina's main corn belt, Heinzenknecht added.

"Western growing areas are very dry and we do not expect any relief this month," he said. "September will end with a lot of areas in drought."

Dryness in Argentina and Brazil threatens crops in those countries at a time top buyer China is relying heavily on South America for supplies due to a trade war with the United States.

'Great Intentions'

The government has supported soy and corn growing with a recent soymeal export deal with China and by promoting exports of Argentine pork and poultry, both of which are fed corn and soymeal.

"Their intentions are great, but without good weather the results will be nil," Heinzenknecht said, adding that rain was expected in the first 10 days of October but there was no certainty over how long that would continue.

"There is much more climate uncertainty this season than there was last season," he said.

Profit margins favour planting soy over corn, said Gustavo Lopez, head of the Agritrend consultancy.

Dry Weather

"Regarding the rain, farmers are starting to worry," he said. "But everything suggests that at the end of September the weather should start to normalise."

The US Department of Agriculture expects a 2019/20 Argentine soy crop of 53 million tonnes versus 55.3 million tonnes in 2018/19. The USDA projects a 2019/20 corn crop of 50 million tonnes versus 51 million in 2018/19.

Pedro Vigneau, who operates a farm in the central Buenos Aires district of Carlos Casares, said his wheat yields would start to suffer if next month does not bring ample rains.

"We are a little dry but it's not harmful yet. If it rains, as expected, in October, we'll be okay," he said.

News by Reuters, edited by ESM. Click subscribe to sign up to ESM: European Supermarket Magazine.

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