War-driven cost surge squeezes Argentina farm margins, but record crop still seen boosting dollar inflows

Argentina’s farm sector entered 2026 with a favorable outlook, but the global backdrop has shifted as the war in the Middle East pushes up freight, fuel and fertilizer costs, threatening to erode producer margins even as higher commodity prices underpin a stronger flow of export dollars to the Central Bank.

Argentina’s 2025/26 crop campaign is expected to generate more than $35.375 billion in foreign-currency inflows, according to the latest projections from the Rosario Board of Trade (BCR), which points to a record grain harvest and relatively firm international prices supported by the conflict. The estimate is about $850 million above earlier forecasts, the BCR said.

That export-driven supply of dollars is a key variable for Argentina’s macro outlook. The inflows help bolster Central Bank reserves, finance imports and support exchange-rate policy at a time of strong demand for hard currency, the report said. On the fiscal side, the government also benefits through higher revenue from export taxes and other trade-linked levies calculated on larger volumes and higher values.

But the same conflict is raising costs across the farm supply chain, reducing profitability and limiting producers’ capacity to reinvest ahead of the next planting cycle, the BCR warned.

Export costs have jumped sharply, the report said. Ocean freight rates, already rising amid a reshaping of global routes, have increased by as much as 50%. Fuel costs — critical for farm machinery and domestic transport — have also been hit by energy-market volatility. Fertilizers, many of them imported, have risen in tandem, forcing farmers to revisit investment decisions and soil-management plans.

For wheat, the cost of planting has increased by $58 per hectare, an almost 11% rise compared with the months before the conflict with Iran, the report said.

“The escalation of military tension in the Middle East has stopped being a distant conflict and has become a determining factor in Argentina’s rural economy,” the BCR said.

The result is a mixed scenario: Argentina benefits from higher global prices but faces a cost squeeze that narrows its advantage versus other exporters, the exchange said, arguing the situation will require mitigation measures ranging from logistics agreements to greater efficiency in domestic transport.

In the Greater Rosario area — the country’s main grain-export hub — logistics have become an added challenge. The Stop 5.0 system, which organizes truck arrivals at ports, is intended to ease congestion and reduce waiting times, but it cannot offset the impact of higher international costs, the report said. Producers say technology helps, but the core problem is the global price structure and the uncertainty generated by the conflict.

The international environment is also shaping investment decisions. Many producers who see the current campaign as a chance to recover after years of drought and financial strain are now reassessing whether to expand capacity or invest in new technology, as input volatility and cost uncertainty discourage long-term projects. Agricultural production requires large upfront spending on seeds, fertilizers, crop chemicals and fieldwork, while revenues are only realized after harvest, the report noted.

The chart below shows Argentina’s main seaborne export commodities in the first two months of the year. Data obtained and processed by Datamar highlights the dominance of agricultural products in the country’s export trade.

Top Exported Commodities | Argentina | Jan-Feb 2026 | TEUs

Source: DataLiner (click here to request a demo)

Economic policymakers are watching the trend closely. The foreign-currency inflow expected from the crop is central to maintaining exchange-rate stability and paying for essential imports, the report said. But if producer margins compress too sharply, reinvestment capacity could be hit, raising questions over how to turn a record harvest into durable economic sustainability.

Source: Forbes Argentina

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