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[Markets] ???????Record Droughts Plague Argentina As Parana River Hits 77-Year Low ???????Record Droughts Plague Argentina As Parana River Hits 77-Year Low

Record droughts plague Argentina, Brazil, Mexico, and Paraguay, threaten crops, water reserves, and economic recovery. 

Concentrating on Argentina, water levels on the Parana River are at 77 years lows, according to Reuters. The river is a major transport route for agricultural exports and a source of drinking water, irrigation, and energy. 

"Water levels in the Parana are at the lowest level since 1944, which requires a commitment from everyone to attend and act preventively and responsibly against this situation," the Government of Argentina said. 

About 80% of the country's farm exports flow from ports along the Parana River. If shipping vessels can't traverse the waterway, then farm goods would be landlocked. 

The top hemispheric factor contributing to drought conditions in South America is summer 2020 La Nina. It managed to push cold water in the eastern Pacific Ocean and reduced precipitation across the region. 

Droughts threaten to damage crop yields in South American economies reeling from the virus pandemic and exacerbate the global food shortage pushing food prices higher. 

S&P Global Platts expands more on the drought and impacts on the global food supply: 

  • Brazil -- the second-largest corn exporter in the world -- suffered severe drought during most of the corn-growing months and in addition to that, the southern part of the country was affected by frost toward the end of June, which exacerbated corn yield losses.
  • Persisting drought conditions in Brazil have trickled down to Argentina through the Parana river basin. Rainfall remained low across northern Argentina in recent months, where most agricultural activities are concentrated.

Days ago, Argentina announced a $10.4 million relief fund to mitigate the impact of the drought. 

S&P Global Platts also makes sense of the wild weather worldwide, contributing not to climate change but rather La Nina: 

The latest forecast by the US Climate Prediction Center said La Nina will potentially emerge during September-November and last through the 2021-22 winter, with a 66% chance during November-January.

The La Nina phenomenon, which is an occasional but natural cooling of the equatorial Pacific, is typically associated with above-normal rainfall in Southeast Asia, South Africa, India, and Australia, and drier weather in Argentina, Europe, Brazil, and the southern US.

This all means that inflation is not "transitory" as the Federal Reserve and all their muppets have tried to convince the world - instead, it'll be sticking around for some time as food prices will remain elevated. 

Tyler Durden Wed, 07/21/2021 - 21:00
Published:7/21/2021 8:06:26 PM
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