Record drought adds to Argentina’s economic woes

Macroeconomic trouble is the norm in Argentina. The country is near the top of global rankings for the most years of recession in the last century, while high inflation is even more common — currently above 100 percent for the first time since the hyperinflation crisis of 1990.

Systemic fiscal and trade deficits, exacerbated by spiraling debt crises, are seen by economists as the main reasons for the malaise. None of these factors are likely to improve this year as the country’s main source of exports, agriculture, suffers from one of the worst droughts in recent history.

Estimates from the Rosario Board of Trade have worsened in recent weeks, showing dramatic declines compared to last season’s. According to their latest report, Argentina’s soybean output will fall from 42 million tons in 2022 to 27 million tons this year. 

Corn and wheat will see similarly dramatic drops, the Rosario analysts forecast, from 51 and 23 million tons last year to 35 and 11.5 million tons in 2023, respectively. 

“The climate this season has combined the worst aspects of the two worst harvests Argentina has seen in the last 20 years. The start of the cycle was much drier than that of 2008/2009, with a record number of hectares that were not sown, and the end has also seen less humidity than during the 2018 harvest, as temperatures were the highest recorded since 1906,” the report says.

Historically, Argentina has relied on its large second-quarter soybean harvest to balance its books — or at least come close to doing...