(Bloomberg) — The road that leads to some of Argentina’s largest ports and soybean processing plants is usually filled with 2,000 trucks every day at this time of year. On a Tuesday afternoon late last month, there were only a handful.
After the worst drought in six decades left the world’s largest exporter of soy products with the smallest crop in nearly 25 years, farmers are running out of the very commodity that fuels Argentina’s economy.
Soybean factories owned by US trading giants Cargill Inc. and Bunge Global SA, as well as China’s Cofco International and local processor Vicentin are all operating at reduced capacity or have shut altogether. With almost nothing to export, Argentina is being starved of the dollars it desperately needs, spelling trouble for the new president set to be elected this weekend.
“The drought situation in Argentina is catastrophic for us,” Gustavo Idigoras, head of Ciara-Cec, a lobby group representing some of the country’s top soy crushers and crop shippers, said in an interview in Buenos Aires. “The real impact of the drought for crushers is from this quarter on.”
The situation couldn’t be more dire. The Board of Trade in the port city of Rosario, which houses most of Argentina’s soybean processing plants, estimates the economic hit from lower crop exports at $16 billion — all at a time when a new president will need as many dollars as possible to shore up an economy grappling with inflation of 143%.
Read More: Down $200 Billion, Argentine Farmers Seek Salvation in Milei
Juan Luciano, an Argentine national and chief executive officer of Chicago-based Archer-Daniels-Midland Co., had already warned farmers in the country were running out of inventory. In a call with analysts at the end of October, he predicted Latin America’s second-largest economy would run out of soybeans this month.
He was right. The vast parking lots on the road to the crushing plants — clustered around Rosario — are pretty much deserted. On any given day in recent weeks, truck deliveries from the Pampas crop belt were scant.
Truck Deliveries
Take the first Friday of November, when just 382 soy cargoes rolled into the Rosario area, 59% fewer than the same day a year earlier, according to trucking agency AgroEntregas. That was one of the worst days for deliveries recently. The drought also curbed arrivals of other crops.
As a result, several soy plants are already bringing forward annual maintenance, putting production lines out of action earlier than normal, said Julian Echazarreta, a director at ACA, a major agriculture cooperative. Idle capacity at plants could reach as much as 70%, according to the Rosario Board of Trade.
Vicentin, once the crown jewel of Argentina’s soy processing industry, shut its San Lorenzo plant for maintenance earlier than usual, said Estanislao Bougain, a board member at the company. The Ricardone facility, which crushes both soy and sunflower seeds, is also down. While the firm is in bankruptcy proceedings, it has allowed other exporters to use its factories to keep some cash flowing in.
Cargill is running at least one of its processing plants in Argentina at reduced capacity, Cofco is operating mostly out of its Timbues facility, and Bunge isn’t running the crush plant at its T6 facility, said people familiar with the matter, who asked not to be identified discussing confidential market information key to competition.
Cargill and Cofco declined to comment. Bunge didn’t reply to a request for comment.
As the soy industry grinds to a halt, neighboring Brazil has overtaken Argentina as the world’s top exporter of soybean meal — a key ingredient in animal feed — for the first time since 1998.
The economic impact — worsened by an unexpectedly small wheat harvest that’s currently being gathered — is huge. Exports of all crops including soybeans, wheat and sunflower seeds are forecast at just $25.5 billion, 39% less than in the 2021-22 season, the Rosario exchange estimates.
Farmer Sales
To be sure, farmers still have about 2.5 million metric tons of soybeans in their hands before the new harvest starts in April. While that’s less than half what’s usual at this point in the year, it could help some factories restart should the new president devalue the peso after the elections.
“When we can lock in margins, we’ll run,” Greg Heckman, CEO of Bunge, said in an interview in Minneapolis earlier this month, declining to comment on the current status of its Argentine plants and terminals.
There will also likely be more imports next quarter from neighboring Paraguay, Vicentin’s Bougain said. At that point, the company should resume tolling operations. Argentina has also imported record supplies from Brazil this year.
Read More: Rains on Parched Argentina Farms Can Unlock Soy Planting
For now, it’s going to be a long wait for fresh soybeans — which haven’t even been planted yet. And the pain is only going to get deeper as more factories run out of supplies.
“For sure the industry will close some production lines,” said Idigoras of Ciara-Cec.
OTTAWA – Statistics Canada says wholesale sales, excluding petroleum, petroleum products, and other hydrocarbons and excluding oilseed and grain, rose 0.4 per cent to $82.7 billion in July.
The increase came as sales in the miscellaneous subsector gained three per cent to reach $10.5 billion in July, helped by strength in the agriculture supplies industry group, which rose 9.2 per cent.
The food, beverage and tobacco subsector added 1.7 per cent to total $15 billion in July.
The personal and household goods subsector fell 2.5 per cent to $12.1 billion.
In volume terms, overall wholesale sales rose 0.5 per cent in July.
Statistics Canada started including oilseed and grain as well as the petroleum and petroleum products subsector as part of wholesale trade last year, but is excluding the data from monthly analysis until there is enough historical data.
This report by The Canadian Press was first published Sept. 13, 2024.
VICTORIA – British Columbia is forecasting a record budget deficit and a rising debt of almost $129 billion less than two weeks before the start of a provincial election campaign where economic stability and future progress are expected to be major issues.
Finance Minister Katrine Conroy, who has announced her retirement and will not seek re-election in the Oct. 19 vote, said Tuesday her final budget update as minister predicts a deficit of $8.9 billion, up $1.1 billion from a forecast she made earlier this year.
Conroy said she acknowledges “challenges” facing B.C., including three consecutive deficit budgets, but expected improved economic growth where the province will start to “turn a corner.”
The $8.9 billion deficit forecast for 2024-2025 is followed by annual deficit projections of $6.7 billion and $6.1 billion in 2026-2027, Conroy said at a news conference outlining the government’s first quarterly financial update.
Conroy said lower corporate income tax and natural resource revenues and the increased cost of fighting wildfires have had some of the largest impacts on the budget.
“I want to acknowledge the economic uncertainties,” she said. “While global inflation is showing signs of easing and we’ve seen cuts to the Bank of Canada interest rates, we know that the challenges are not over.”
Conroy said wildfire response costs are expected to total $886 million this year, more than $650 million higher than originally forecast.
Corporate income tax revenue is forecast to be $638 million lower as a result of federal government updates and natural resource revenues are down $299 million due to lower prices for natural gas, lumber and electricity, she said.
Debt-servicing costs are also forecast to be $344 million higher due to the larger debt balance, the current interest rate and accelerated borrowing to ensure services and capital projects are maintained through the province’s election period, said Conroy.
B.C.’s economic growth is expected to strengthen over the next three years, but the timing of a return to a balanced budget will fall to another minister, said Conroy, who was addressing what likely would be her last news conference as Minister of Finance.
The election is expected to be called on Sept. 21, with the vote set for Oct. 19.
“While we are a strong province, people are facing challenges,” she said. “We have never shied away from taking those challenges head on, because we want to keep British Columbians secure and help them build good lives now and for the long term. With the investments we’re making and the actions we’re taking to support people and build a stronger economy, we’ve started to turn a corner.”
Premier David Eby said before the fiscal forecast was released Tuesday that the New Democrat government remains committed to providing services and supports for people in British Columbia and cuts are not on his agenda.
Eby said people have been hurt by high interest costs and the province is facing budget pressures connected to low resource prices, high wildfire costs and struggling global economies.
The premier said that now is not the time to reduce supports and services for people.
Last month’s year-end report for the 2023-2024 budget saw the province post a budget deficit of $5.035 billion, down from the previous forecast of $5.9 billion.
Eby said he expects government financial priorities to become a major issue during the upcoming election, with the NDP pledging to continue to fund services and the B.C. Conservatives looking to make cuts.
This report by The Canadian Press was first published Sept. 10, 2024.
Note to readers: This is a corrected story. A previous version said the debt would be going up to more than $129 billion. In fact, it will be almost $129 billion.
NANAIMO, B.C. – Former Bank of Canada governor Mark Carney says he’ll be advising the Liberal party to flip some the challenges posed by an increasingly divided and dangerous world into an economic opportunity for Canada.
But he won’t say what his specific advice will be on economic issues that are politically divisive in Canada, like the carbon tax.
He presented his vision for the Liberals’ economic policy at the party’s caucus retreat in Nanaimo, B.C. today, after he agreed to help the party prepare for the next election as chair of a Liberal task force on economic growth.
Carney has been touted as a possible leadership contender to replace Justin Trudeau, who has said he has tried to coax Carney into politics for years.
Carney says if the prime minister asks him to do something he will do it to the best of his ability, but won’t elaborate on whether the new adviser role could lead to him adding his name to a ballot in the next election.
Finance Minister Chrystia Freeland says she has been taking advice from Carney for years, and that his new position won’t infringe on her role.
This report by The Canadian Press was first published Sept. 10, 2024.
