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March 30, 2017

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Fresh rains sustain flood risk to Argentine agriculture

BUENOS AIRES--Rains expected to hit Argentina's grains belt this week will sustain the floods that have fanned global supply worries by swamping and blocking access to key soy, corn and wheat areas, local experts said on Monday.

Importers need all the South American grains they can get after a string of disappointing harvests from global breadbaskets Russia, the United States and Australia.

International grains prices have soared this year on the back of thin supplies and growing food demand while Argentine farm output — particularly in key agricultural province Buenos Aires — has come under pressure from months of heavy rains.

Even normal rainfall at this point poses a problem in Argentina, the world's top exporter of soy oil and soy meal.

"West, central and eastern Buenos Aires province are flooded. This is flat land that does not have enough slant toward the ocean to drain off. Logistics are in chaos because the floods are crisscrossing over the roads," said Anthony Deane, head of consultancy Weather Wise Argentina.

The National Weather Service said at least 10 millimeters (0.4 inches) of rain fell in the heart of Argentina's farm belt — Buenos Aires, Cordoba, Santa Fe and Entre Rios province — in the 24 hours through Monday morning.

"It was not a lot of rain but any added moisture at this point sustains the flooding," Deane said.

Until the Sunday-Monday showers, the rate of soy and corn planting had picked up as the weather moderated after the Pampas was lashed by unusually harsh August-October storms.

Toward the end of this week, Deane said he expects 100-150 mm to fall over 60 percent of Argentina's grains belt, while the remaining 40 percent gets 40-50 mm.

Soggy topsoil make it impossible for farmers to drive their seeding machines — weighing about 30 tons each, fully outfitted — over their fields without sinking in the mud.

The floods come at a bad time for consumer nations counting on South American grains supply. Low stocks have squeezed benchmark Chicago soy prices 22 percent higher this year while corn is up 17 percent and wheat 31 percent.

The Buenos Aires town of Carlos Casares received 20 to 30mm of rain early on Monday, said Eugenio Borras, a manager for Argentine soy farming giant Los Grobo.

The company is based in the town, where soy planting is running 50 percent slower than last year's pace.

"Everything in the center of Buenos Aires province is very complicated. A lot of land is under water," said Borras, who manages 25,000 hectares (62,000 acres) of soy cultivation for Los Grobo.

"The worst part is the logistics. Farmers can't get to some of their fields," he said.

As of last Thursday, the Argentine government said 58 percent of the 19.4 million hectares expected to be sown with soy this season had been planted, lagging last season's seeding tempo by 8 percentage points.

Growers had planted 63 percent of their corn by Thursday, lagging last year's pace by 10 points, it said.

The Agriculture Ministry says the country could produce 55 million to 58 million tons of soybeans this season.

It sees 11.1 million tons of wheat output in the 2012/13 crop year, having cut its estimate from 11.5 million tons last month. It also marked down the corn area to 4.7 million hectares from a previous 4.97 million.

The U.S. Department of Agriculture expects Argentina to harvest 55 million tons of soy, 11.5 million tons of wheat and 28 million tons of corn in the current 2012/13 crop year.

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