Argentina’s upcoming corn crop already looks to be in trouble as continuing drought threatens to set back planting and lagging fertilizer imports could result in lower nutrient applications for the plants.
In Córdoba, Buenos Aires, and Santa Fe — Argentina’s main corn-growing provinces — precipitation has been well below average since June, as seen in this Gro display. In addition, soil moisture levels in Argentina’s corn growing areas are the lowest in over a decade, according to Gro’s Climate Risk Navigator for Agriculture.
Many Argentine farmers may be reluctant to plant under such dry conditions after last year, when drought caused corn production to fall by 31% from a year earlier. Planting of the first corn crop normally gets underway in September-October in Argentina, which is the world’s third-largest corn exporter.
Shrinking imports of urea and urea ammonium nitrate (UAN) — imports make up about half of Argentina’s total annual consumption of the two popular fertilizers — also are putting the upcoming corn crop at risk. For January through July 2023, Argentina’s urea imports are down 28% year over year, as seen in this Gro display. That marks the second consecutive year of fertilizer import declines even as corn planted acreage has varied little, according to Gro’s Argentina Corn Monitor.
UAN imports are essentially flat year over year, although volumes are down 21% from the same January-July period in 2021. On average, Argentina consumed 1.5 million tonnes of urea fertilizer and more than 500,000 tonnes of UAN annually between 2015-2020.
The Argentine currency’s weak exchange rate against the US dollar — currently at its lowest level in over 20 years — has driven up the cost of fertilizer imports. When converted to Argentine pesos, implied local prices — which excludes freight, storage, and handling costs — from major urea suppliers Algeria and Egypt are the highest in at least five years. (See chart below.)
Dry conditions in Argentina’s corn growing areas exacerbates the impact of a potential tightening of nitrogen fertilizer supplies. That’s because planting in dry soils normally requires extra applications of nitrogen, since the nutrient isn’t as readily absorbed as it is when soils have normal moisture levels. As a result, Argentina’s available fertilizer supplies may be insufficient to help the upcoming corn crop overcome a weak start.
Large corn crops this year in Brazil and the US will offset any shortfall in Argentina’s production for global supplies. Still, a poor crop could further damage Argentina’s beleaguered economy. In 2022, for example, reduced nitrogen applications to Argentina’s staple crops — which include corn, rice, soybeans, and wheat — resulted in an estimated 1.4% decrease in food production, equivalent to about 365 trillion calories, according to Gro’s Global Fertilizer Impact Monitor, which calculates the impact on crop output worldwide based on projected cutbacks in nitrogen fertilizer consumption.
Gro’s Fertilizer Impact Monitor was built with support from the Bill & Melinda Gates Foundation and in partnership with the International Fertilizer Association and CRU Group.
Rain will be critical in the next few weeks to recharge the soil and enable Argentine corn planting to proceed as planned. Current forecasts call for minimal precipitation. If that continues, farmers could decide to shift more of their planting to the second corn crop, which is planted at the turn of the year, or switch to soybeans, which go in the ground in November-December.
Argentina’s urea fertilizer import costs have risen sharply as the Argentine peso has lost value against the US dollar. This chart shows urea prices from major producers Algeria and Egypt converted into pesos, indexed for the past five years.