Argentina drought sparks grain price rally
CHICAGO/CHIVILCOY, Argentina, March 5 (Reuters) - A rgentina’s worst drought in decades is shriveling farmers’ fields, sending grain prices soaring and forcing Bunge Ltd and other major crop processors to crush fewer oilseeds into feed that fattens livestock around the world.
The drought in Argentina, the world’s No. 3 exporter of corn and soybeans, has not ended a scenario of global oversupply left by years of bumper harvests driven by good weather and genetically engineered crops.
But combined with separate bouts of dryness threatening crops in U.S. Plains states and South Africa, losses in Argentina are eating into global reserves and prompting global buyers to accelerate purchases.
Farmers in the U.S. Midwest are scrambling to sell grain that has been held in storage for months to take advantage of prices rallying on Argentina’s struggles.
“You never wish a drought on another country but sometimes that’s what it takes,” said Illinois corn and soy grower Rob Schaffer, who is stepping up sales of crops to take advantage of climbing U.S. prices.“It’s basically been a gift.”
Thousands of miles away in the rural Argentine town of Chivilcoy, farmer Bernardo Romano has the opposite point of view. His soybean and corn plants stand at only half their typical height, starved of rain. Corn ears are 70 percent smaller than normal about a month before harvest is set to begin.
“This is going to have a very big impact on the regional economy,” he said, adding that farmers were praying for rain to mitigate more losses to late-planted crops.
Rains this growing season have only been a quarter of normal, Romano said. At most, he expects his soybeans to produce a third of their normal yield.
The Buenos Aires grains exchange cut three million tonnes off its soy forecast on Thursday, putting it about a quarter smaller than last year’s crop.
Source: Reuters
