So much rain has fallen over Argentina in recent weeks that it could cost soybean farmers here up to $2 billion in lost output this year, analysts said Monday.
That could also cost Argentina’s government, which taxes soybean exports at 30%, up to $600 million in lost tax revenue.
Rain has been pouring nearly nonstop over farms in the provinces of Buenos Aires, Cordoba, Entre Rios and Santa Fe, ruining soybeans in ways that some experts say they have never before seen.
“I expect production to decline sharply,” said Ricardo Baccarin, vice president of Panagrícola, a commodities brokerage.
Mr. Baccarin is slashing his estimate for soybean production by six million tons to around 55 million this year. Just a week or two ago, analysts were saying Argentina could produce closer to 60 million tons in 2016, in line with last year’s harvest.
In many areas, the rain has muddied dirt roads and fields, preventing farmers from bringing in equipment needed to harvest soybeans. Even if farmers could get harvesters into the soybean fields, the combination of heavy equipment and muddied ground would ruin the soil, said Andrés Rosenberg, who manages farms in Buenos Aires and Entre Rios.
Mr. Rosenberg said that farmers here have spent years preparing the soil using a technique known as direct seeding, which reduces soil erosion and can boost yields.
“I can’t get the combine harvester into the fields because the road is flooded,” said Mr. Rosenberg.
In many cases, farmers collect the beans and sell them to exporters for shipment to China and other countries. Along with Brazil and the U.S., Argentina is one of the world’s leading soybean exporters. It is also a leading exporter of soybean oil and soy meal.
The excess humidity has caused soybean seeds to sprout before they can be collected, meaning that even if farmers can harvest the beans they may not be able to market them.
“I’ve been in this business for 35 or 40 years and I’ve never seen this happen,” said Mr. Baccarin.
Around 20% of the crop has been harvested so far, said Rodolfo Rossi, president of ACSOJA, a soybean industry association. Normally by this time of the year about 40% would have been harvested, he said.
“Work on the crop has stopped in many areas,” he said.
Mr. Rossi said it is too early to say how much damage the rain will cause, but he said in four or five days it will be clear if estimates such as Mr. Baccarin’s are right.
Much of the soybean industry has ground to a halt, he said, noting that some factories that crush soybeans into oil have suspended or slowed production. He said the damage to this year’s crop is irreversible.
“We just hope things don’t get worse,” he said.
(Source – http://www.wsj.com/articles/heavy-rains-take-toll-on-argentinas-soybean-crop-1461012962)