Paraná River drought affects Argentine exports

The Paraná River is the main Argentine trade route. About 80% of the country’s agricultural exports flow through its waters towards the Atlantic Ocean.

So when the river reached its lowest level since the 1940s – the result of years of drought that scientists attribute to climate change – it deepened the crisis of an economy trying to recover from the economic collapse caused by the Covid pandemic.

Grain traders suddenly found themselves forced to reduce the volume of cargo on vessels to avoid getting stuck on the shallow banks of the river. They can either increase cargo volumes when the vessels reach deeper seaports or spread out their shipments by hiring more vessels. Both are expensive and time-consuming options that harm an industry that generates more than US$ 20 billion in exports per year. Gustavo Idigoras, president of Ciara-Cec, a grain export and processing association whose members include Cargill and Glencore, sees an “emergency situation” that will probably last until the end of the year.

There was also a financial impact on the import side: with the low levels of the river, hydroelectric power generation drops and, as a result, more money needs to be spent to buy diesel for the power plants. Diesel imports soared to the highest level since 2018. The Yacyretá dam, which normally supplies about 14% of Argentina’s energy on the river’s northern border, is operating at just a third of its capacity.

The combination of a slowdown in exports and an increase in imports reduces the country’s trade surplus and contributes to a series of factors that bring down the peso, already the worst-performing currency among emerging markets this year. This has prompted the central bank to return to currency markets in recent days to sell dollars and support the peso in an attempt to keep inflation from getting further out of control.

Source: Money Times

To read the full original article, visit the link:

https://www.moneytimes.com.br/seca-no-rio-parana-afeta-exportacoes-de-soja-da-argentina-veja-imagens/

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