Argentina’s herd will shrink by up to 1 million head of cattle next year as ranchers facing scorched pastures after the worst drought in decades decide to slaughter females rather than grow their herds, analysts said.
Argentine President Mauricio Macri said the government would provide some debt relief to farmers struggling through what he described as the country’s worst drought in 40 years, which has resulted in dramatic cuts to soybean and corn crop outlooks.
Argentina's Rosario Grains Exchange slashed 14% off its forecast for the country's soy crop on Thursday, saying a drought now in its fourth month would limit the harvest to 40 million tons versus its previous estimate of 46.5 million. Argentina has been suffering dry weather since last November.
The drought in Argentina continues in several regions and has generated a delay of planting for the 2017-18 season. A report authored by the institution AgroEducación indicated that La Niña, though subtle, already impacts the region with temperatures above normal and scarce rains.
A strong El Niño is likely to increase prices of staple foods such as rice, coffee, sugar and cocoa, say scientists. Forecasters agree that the El Niño effect, which can drive droughts and flooding, is under way in the tropical Pacific, but they say it is too early to say how severe it will be.
US soybean futures tumbled on Monday trading posting their biggest percentage drop in nearly one year, on selling sparked by anecdotal accounts of better-than-expected yields in the Midwest farm belt.
Global food prices remained steady in August, the United Nations food agency said Thursday, but warned that the game is not over as it was only the beginning of the harvest season.
Global food prices soared by 10% in July from a month ago, with maize and soybean reaching all-time peaks due to an unprecedented summer of droughts and high temperatures in both the United States and Eastern Europe, according to the World Bank Group’s latest Food Price Watch report.
Soy beans in Chicago climbed to their highest having advanced 0.4% on Thursday to 650.47 dollars the ton, while corn up 0.2% to 319.47 dollars the ton came closer to its record value of last August, 327.25 dollars. Wheat meantime slid 0.2% to 324.64 dollars the ton.
US and European wheat futures gained again on Thursday as importers took advantage of a price fall earlier in the week and as operators continued to anticipate Russia would drop out of export markets in the coming months due to drought-hit supply.