(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 – Canada’s unemployment rate held steady at 6.5 per cent last month as hiring remained weak across the economy.
Statistics Canada’s labour force survey on Friday said employment rose by a modest 15,000 jobs in October.
Business, building and support services saw the largest gain in employment.
Meanwhile, finance, insurance, real estate, rental and leasing experienced the largest decline.
Many economists see weakness in the job market continuing in the short term, before the Bank of Canada’s interest rate cuts spark a rebound in economic growth next year.
Despite ongoing softness in the labour market, however, strong wage growth has raged on in Canada. Average hourly wages in October grew 4.9 per cent from a year ago, reaching $35.76.
Friday’s report also shed some light on the financial health of households.
According to the agency, 28.8 per cent of Canadians aged 15 or older were living in a household that had difficulty meeting financial needs – like food and housing – in the previous four weeks.
That was down from 33.1 per cent in October 2023 and 35.5 per cent in October 2022, but still above the 20.4 per cent figure recorded in October 2020.
People living in a rented home were more likely to report difficulty meeting financial needs, with nearly four in 10 reporting that was the case.
That compares with just under a quarter of those living in an owned home by a household member.
Immigrants were also more likely to report facing financial strain last month, with about four out of 10 immigrants who landed in the last year doing so.
That compares with about three in 10 more established immigrants and one in four of people born in Canada.
This report by The Canadian Press was first published Nov. 8, 2024.
The Canadian Institute for Health Information says health-care spending in Canada is projected to reach a new high in 2024.
The annual report released Thursday says total health spending is expected to hit $372 billion, or $9,054 per Canadian.
CIHI’s national analysis predicts expenditures will rise by 5.7 per cent in 2024, compared to 4.5 per cent in 2023 and 1.7 per cent in 2022.
This year’s health spending is estimated to represent 12.4 per cent of Canada’s gross domestic product. Excluding two years of the pandemic, it would be the highest ratio in the country’s history.
While it’s not unusual for health expenditures to outpace economic growth, the report says this could be the case for the next several years due to Canada’s growing population and its aging demographic.
Canada’s per capita spending on health care in 2022 was among the highest in the world, but still less than countries such as the United States and Sweden.
The report notes that the Canadian dental and pharmacare plans could push health-care spending even further as more people who previously couldn’t afford these services start using them.
This report by The Canadian Press was first published Nov. 7, 2024.
Canadian Press health coverage receives support through a partnership with the Canadian Medical Association. CP is solely responsible for this content.
As Canadians wake up to news that Donald Trump will return to the White House, the president-elect’s protectionist stance is casting a spotlight on what effect his second term will have on Canada-U.S. economic ties.
Some Canadian business leaders have expressed worry over Trump’s promise to introduce a universal 10 per cent tariff on all American imports.
A Canadian Chamber of Commerce report released last month suggested those tariffs would shrink the Canadian economy, resulting in around $30 billion per year in economic costs.
More than 77 per cent of Canadian exports go to the U.S.
Canada’s manufacturing sector faces the biggest risk should Trump push forward on imposing broad tariffs, said Canadian Manufacturers and Exporters president and CEO Dennis Darby. He said the sector is the “most trade-exposed” within Canada.
“It’s in the U.S.’s best interest, it’s in our best interest, but most importantly for consumers across North America, that we’re able to trade goods, materials, ingredients, as we have under the trade agreements,” Darby said in an interview.
“It’s a more complex or complicated outcome than it would have been with the Democrats, but we’ve had to deal with this before and we’re going to do our best to deal with it again.”
American economists have also warned Trump’s plan could cause inflation and possibly a recession, which could have ripple effects in Canada.
It’s consumers who will ultimately feel the burden of any inflationary effect caused by broad tariffs, said Darby.
“A tariff tends to raise costs, and it ultimately raises prices, so that’s something that we have to be prepared for,” he said.
“It could tilt production mandates. A tariff makes goods more expensive, but on the same token, it also will make inputs for the U.S. more expensive.”
A report last month by TD economist Marc Ercolao said research shows a full-scale implementation of Trump’s tariff plan could lead to a near-five per cent reduction in Canadian export volumes to the U.S. by early-2027, relative to current baseline forecasts.
Retaliation by Canada would also increase costs for domestic producers, and push import volumes lower in the process.
“Slowing import activity mitigates some of the negative net trade impact on total GDP enough to avoid a technical recession, but still produces a period of extended stagnation through 2025 and 2026,” Ercolao said.
Since the Canada-United States-Mexico Agreement came into effect in 2020, trade between Canada and the U.S. has surged by 46 per cent, according to the Toronto Region Board of Trade.
With that deal is up for review in 2026, Canadian Chamber of Commerce president and CEO Candace Laing said the Canadian government “must collaborate effectively with the Trump administration to preserve and strengthen our bilateral economic partnership.”
“With an impressive $3.6 billion in daily trade, Canada and the United States are each other’s closest international partners. The secure and efficient flow of goods and people across our border … remains essential for the economies of both countries,” she said in a statement.
“By resisting tariffs and trade barriers that will only raise prices and hurt consumers in both countries, Canada and the United States can strengthen resilient cross-border supply chains that enhance our shared economic security.”
This report by The Canadian Press was first published Nov. 6, 2024.
