After a severe drought significantly impacted Argentina’s agriculture sector in 2023, projections for 2024 are more optimistic. Some private studies indicate that sector exports could grow by over US$13 billion next year.
A better climate will allow for a higher volume of exports of the main grains and their by-products. A drop in international prices, however, may limit the impact of this growth. A report from Fundación Capital estimated that agricultural exports will total over US$32 billion next year.
“This would allow for a significant improvement in foreign exchange earnings through exports and increased revenue from export duties, in addition to boosting economic activity in agriculture and related sectors,” consultancy Ecolatina noted.
The Fundación Capital study analyzed the prospects of “one of the sectors that contributes the most foreign exchange to the country.” They highlighted that “the development of the main harvest needs to be monitored, given that the fine harvest has been limited because rain has not reached the entire country yet.”
“Although some dollar flow normalization is expected by 2024, it will not be complete. About US$13,2 billion of the US$19,3 billion lost in 2023 due to the severe drought would be recovered if the climate risk diminishes,” the study estimated, predicting agricultural exports will amount to around US$32,6 billion in 2024.
If these estimated figures become real, however, foreign exchange generated by agricultural exports in 2024 will be below what was achieved in 2022 and 2021 (US$35,4 and US$33,6 billion, respectively).
The report also detailed that “according to the Buenos Aires Grain Exchange, the end of the drought and the expected presence of the El Niño climate phenomenon (which implies abundant rainfall in most of the country’s agricultural area) would result in the 2023/2024 main crop reaching 105 million tons between corn and soybeans.”
“Soybean production is expected to reach 50 million tons, a 132.6% increase compared to the previous cycle and 1.8% above the average of the last five campaigns, excluding drought years. Meanwhile, corn production would reach 55 million tons, a 71.9% increase from the previous season and 12.8% above the average of the previous five,” the study added.
Nevertheless, the analysis highlights that prices for the next year will slightly drop, averaging 8.3% lower than in 2023, “in line with a greater global grain supply and the continuation of a tight global monetary policy.”
Regarding the first point, a 5.1% increase in global corn production and an 8.4% increase in soybean production are expected, according to the United States Department of Agriculture (USDA). As for monetary policy, it is expected that “the global context of high interest rates will continue in 2024, which could also impose a ceiling for commodities.”
Rain has arrived
Positive signs regarding the weather have started to appear in recent days. Last week, the Rosario Stock Exchange mentioned that the rains “arrived just in time to prevent the decline in wheat yields.”
“The rainfall, which happened between October 20 and 24, arrived at the right moment for wheat, which was in regular to poor condition before the rains. Persistent drought had led to yield reductions. However, the arrival of more than 30 millimeters of rain in 90% of the core region has been a lifesaver for this crop,” they said.
On Monday, they highlighted “good news for the core region: it is raining, and will continue to rain.”
“The rains of the past days are expected to continue until Wednesday or Thursday, with the expectation of an additional albeit less intense storm. The rains are concentrated in areas like northwest Buenos Aires, eastern Córdoba, and northern Rosario,” concluded the Rosario Stock Exchange report.