What are the prospects for grain production in Argentina?

Argentina's cereal and oilseed production is facing one of its best harvests in recent years, although it did not achieve record levels as originally expected. The 2024/25 cycle, which started with good expectations, was affected by a series of climatic phenomena. 

There was a combination of drought, intense heat waves and, subsequently, excessive rainfall. This has directly affected crop yields, logistical dynamics and trade prospects for the country, which is one of the world's largest exporters of soybeans and corn. 

In this article, you will understand: 

• What were the main weather events that influenced grain production in Argentina;
• How these phenomena affected soybean and corn productivity;
• The direct effects on internal logistics and shipments to ports;
• The possible consequences for the grain market in Latin America;
• We will also identify climate trends and risks for the next harvests.
  
  

To delve deeper into the analysis of this scenario, we have invited Antonella Ortiz, Hedgepoint's Client Relations Manager, who closely follows the evolution of the harvest in the country. Enjoy the reading! 

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Challenging weather: from initial optimism to regional losses 

The beginning of the cycle was promising. Planting conditions, although not ideal in terms of moisture, were satisfactory thanks to the rains that recovered soil moisture. However, January and February brought severe water stress and above-average temperatures. 

Just when the market had given up on the idea of a record crop, a new climatic factor surprised everyone. In mid-May, an extreme storm hit mainly the north of Buenos Aires province.  

"We had precipitation out of the ordinary. In some localities, it rained the amount equivalent to the entire annual rainfall: up to 400 millimeters in a few days," comments Antonella. According to the government agency INTA, immediately after the event, excess water was observed in the soil in a large part of the productive area". 

The floods hindered the harvest and threatened between 2 and 3 million tons of soybeans that were still in the fields. Although more than 80% of the soybeans had already been harvested, the rest was affected by soil saturation. 

Read also:
●  Water stress in South American crops and its climatic patterns. 

Effects on soybean and maize production: data and analysis 

Soybeans 

Until before the heavy rains in May, soybean production estimates were bullish. "Pre-event projections were 50 million tons by the Buenos Aires Grain Exchange, while the Rosario Stock Exchange estimated 48.5 million," Antonella says. 

Despite the impact of the floods, we estimated that the damage should be relatively limited in the total crop. My forecast was for 48 million tons, as a floor. The most recent projections, with threshing almost completed, are 50.3 Mtns (Buenos Aires Grain Exchange) and 48.5 M tns (Rosario Stock Exchange).  

It should be noted that "in spite of localized damages, soybean grew in planted area in this harvest: more than 17.75 million hectares, which represents an increase of 7.9% with respect to the previous cycle, according to the Rosario Stock Exchange", it details. 

Corn 

Corn, on the other hand, was already facing structural challenges before the recent climatic phenomena. The presence in corn of the so-called "chicharrita" caused a drop of almost 20% in the planted area. "This pest broke a nine-year trend of continuous growth in the area dedicated to corn," says the expert. 

Even so, the heavy rains in May had a much smaller impact on corn, since much of the crop had already been harvested.  Therefore, no significant adjustments were expected in production projections, which remained solid and currently indicate 48.5 million tons (Rosario Stock Exchange) and 49 M tns (BCBA).  

Grain production: quality and logistical bottlenecks 

The volume cutback was not in the focus of concern but grain quality was, due to excess moisture. Stagnant water for more than three or four days can completely spoil some lots. Fortunately, "the subsequent drier and cooler weather helped speed up drainage and the completion of the harvest," notes Antonella. 

In transportation, the effects were immediate. "Argentina's road network was severely affected. The flow of trucks to the ports was reduced by more than 50% during the critical days," she recalls. 

To get an idea, before the rains, the ports received around 3,000 soybean and 1,700 corn trucks a day, an average volume in line with harvest seasonality.  These figures temporarily plummeted. 

Effects on the Latin American market 

Although the impacts on cereal and oilseed production in Argentina are locally relevant, their weight in the world scenario is limited, especially in the case of soybeans. According to USDA's June report data, world soybean reserves are abundant, with projections of 124.2 million tons for 2024/25, a figure that is projected to rise to 125.3 million in the following harvest. 
 

Given this scenario, the potential loss of between 2 and 3 million tons in Argentina should not generate major distortions in international prices. The most direct effect will be on the production of by-products, such as soybean meal and oil, since the country is focused on the processing industry. 

In the case of corn, the situation is similar. Argentina's domestic demand is stable at around 14.5 million tons. Therefore, the exportable balance functions as an adjustment variable in the event of possible drops. However, the abundant world supply, with the US planting a record area and Brazil harvesting more than 130 million tons, helps to balance the market.

So what about the future of grain production in Argentina? 

Immediate weather risks appear to be under control. Looking ahead to the next harvest, "there are no clear signs of El Niño or La Niña, which favors a climate neutral scenario," says Antonella. 

Regarding the current season, soybean harvest is almost finished, according to the Grain Exchange, as of June 19, it was estimated that 96.5% of the area had been harvested. The remaining work is concentrated in the center of Buenos Aires, where waterlogging conditions still make it difficult for machinery to access. 

In the rest of the central region, the recent cold weather has helped to dry out the plots of land. Recent frosts may even help reduce the "leafhopper" population which reduces the risk for 2025 corn.  

The biggest uncertainty factor remains macroeconomic: the exchange rate, access to credit and the return to export withholding taxes (July 1 ends the transitional drop) should influence investment and planting decisions. 

Understand the movements that shape the agricultural sector. 

Despite not reaching a record harvest, Argentina's cereal and oilseed production remains solid after overcoming important climatic and logistical challenges. This scenario reinforces the resilience of Argentina's agricultural sector. 

When analyzing the current context of Argentina, it becomes clear the importance of taking into account not only climatic variables, but also economic ones. If you want to understand how these forces impact your business, Hedgepoint Market Intelligence can be your best ally. 

Get access to in-depth analysis, strategic insights and data that will help you anticipate market movements, protect your business and maximize opportunities Access our market intelligence and turn data into planning. 
 

Read more:
● Hedgepoint's analysis for the global agricultural market following the WASDE report. 

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