Argentina Drought Worst In 40 Years

Posted by Matt Hopkins|27 January 2009

Argentina’s corn harvests could fall up to 40 percent compared to last year, according to the Buenos Aires Grain Exchange, which says drought has taken its toll on the current crop.

Last week, the Exchange cut its estimates for Argentina’s 2008/09 soy plantings from from 18.2 million hectares to 17.9 million because of dry conditions. Argentina’s President Cristina Fernandez declared an agricultural emergency Monday in areas affected by the worst drought to hit the country in four decades. The state of emergency will allow farmers in affected areas to defer some tax payments for one year.

Farmers, who are already bickering with the government over what they call high export taxes, say they want better long-term emergency planning rather than the subsidies and other short-term remedies.

Soy and soy oil futures rose this week on the fear that diminished output in Argentina will create a supply shortfall.