Argentine grains farmers set for record hard currency harvest

Argentine grains farmers are expected to rake in a record amount of much-needed export dollars this season, with high global prices, port strikes having been defused and enough rain to relieve growing areas that had been dry for months.

This year’s harvest is crucial for the sector and Argentina’s central government, which needs to refill its depleted foreign currency reserves after a sovereign default last year which has left bond prices at historic lows.

“The 2020/21 agricultural season should generate, at current prices, a record income of foreign currency from exports of about $37.5 billion,” said Emilce Terre, head economist at the major Rosario grains exchange.

Argentina’s economy has been in recession since 2018, while the government has maintained strict capital controls to protect the peso and the outflow of dollars from the country.

However, farmers said that things were looking brighter after they convinced the government to not go through with a planned hike in export taxes and state-imposed limits on international corn and wheat shipments.

The government proposed the two measures early this year, drawing criticism from growers, who said they would kill profits, hurt investment and weigh on farm output.

Grains prices are sky high and rains over the last two months have given relief to dry fields, despite some concern that more dry weather could impact yields.

Wage strikes by oilseed workers and port-side crop inspectors had put exports in doubt early this year, as had a dry spell that parched soy, corn and wheat fields since May. Both overhangs caused jitters among exporters and a government strapped for cash due to a recession made worse by COVID-19.

“Today I feel much calmer than in December and January,” said Gustavo Idigoras, head of the CIARA-CEC chamber of grain export companies, referring to the strike-ending agreements that the chamber reached with oilseed workers.

“The challenges have eased significantly and prices are competitive. Argentina has to take advantage of this opportunity,” Id?goras said.

The South American grains powerhouse is the world’s No. 3 corn exporter and the largest supplier of soymeal livestock feed used to fatten hogs and poultry from Europe to Southeast Asia.

According to official data, export companies crushed 3.2 million tonnes of soy in January after having processed only 800,000 tonnes in December, when three unions went on strike. No additional labor unrest is expected over the near term.

WEATHER ‘MIRACLE’

“The way this year started, it was a disaster,” Cristian Russo, senior agronomist analyst at the Rosario exchange, said of the dry weather that started to hit the Pampas grains belt in May and continued into early January.

In the second half of January, and the first weeks of February, abundant rains swept across wide areas.

“What happened at the end of January was a miracle,” Russo said. “Suddenly there was enough moisture to provide extraordinary returns in some areas that had been dry.”

While some eastern parts of the farm belt still need moisture, the early-year storms prompted the Rosario exchange to increase its 2020/21 soybean harvest forecast to 49 million tonnes from a previous estimate of 47 million. And it upped its corn crop forecast to 48.5 million tonnes from 46 million.

The Buenos Aires Grains Exchange said on Thursday that it could yet cut its harvest forecast for Argentina’s 2020/21 soy crop, currently 46 million tonnes, if it does not rain sufficiently in key areas over the weeks ahead. The Buenos Aires exchange’s corn harvest forecast is 46 million tonnes as well.
Source: Reuters (Reporting by Maximilian Heath, writing by Hugh Bronstein; editing by Grant McCool)