Argentine Crop-Storage Costs Seen Increasing on El Nino Arrival

Argentina’s farmers, who are harvesting a record soybean crop, would have to boost storage investments if torrential rain forecast for the second half of the year materializes, an agricultural meteorologist said.

El Nino, a weather system that influences climates worldwide, is expected to produce more rain than usual in parts of South America when the southern hemisphere’s spring starts in September. Heavy rain is expected in Argentina’s soybean belt known as the Pampas in summer, said Eduardo Sierra, a climatologist at the Buenos Aires Grains Exchange.

An El Nino may form by June, according to Australia’s state forecaster, which upgraded an outlook for the weather-altering pattern to alert from watch on Monday. Heavy rain expected for Argentina’s soybean area would be accompanied by hail and strong winds, with a risk of late frost in spring, when farmers start planting, Sierra said.

“The El Nino pattern is always bad news for Argentine farmers as it comes with extremes,” Sierra said in a telephone interview Tuesday from Buenos Aires. “Drought in some areas will cut production and heavier rain in other areas will increase costs as it will be harder for farmers to store and protect their harvested crops from floods.”

Argentina is expecting a record soybean crop in the 2014-2015 season because of timely rain that is resulting in record yields. The country is the third-largest producer of the oilseed, behind the U.S. and Brazil.

El Nino is forecast to bring drought to Bolivia and Argentine northwest and western regions, according to Sierra. In contrast, above-normal rain will be common in southern Brazil and in Argentina’s Pampas and Mesopotamia areas, he said.

“At a first glance, farmers welcome El Nino because humid months are always welcome,” Sierra said. “However, El Nino years are problematic like 2002-2003 that left Santa Fe province under water.”

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