Insight Focus
- Argentina has been hit by heatwaves during the summer.
- Argentine sugar production to decrease by 10% this year
- Domestic sugar prices in Argentina can continue to rise.
Argentina is the 5th largest sugar producer in Latin America. We expect Argentina to produce approximately 1.55m tonnes of sugar for the 2022/23 season, a 10% decrease compared to last year’s harvest.
Of this, 1.47m tonnes of sugar is for domestic consumption, while approximately 250k tonnes of sugar are exported; Argentina does not import sugar.
La Niña Phenomenon
Argentina’s summer months (December to March) are going through a record heatwave. Maximiliano Herrera, a climatologist from CNN, claims, “There is nothing similar that has ever happened in climatic history in Argentina at this scale.” Temperatures in March have been 8 to 10 degrees Celcius warmer in various parts of the country. A second straight year of the la Niña Phenomenon has caused these heat waves in Argentina. As mentioned in my previous article, La Niña occurs when the ocean temperature cools down in the eastern and central parts of the Pacific Ocean. La Niña affects each geographic region differently. It may bring extreme rain or drought to certain countries. It has brought intense dryness in Argentina, destroying crops throughout the country.
Source: SMN
The extreme heatwaves La Niña brought to Argentina have been terrible to its sugar industry. We expect both Argentina’s sugar production and exports to decrease this harvest.
Current Argentine Economic Crisis
Inflation and an unstable currency have wreaked havoc on the Argentine economy over the last few years. The Argentine central bank has raised interest rates to 52% to curb the 70% inflation. This supply-side economic crisis has caused the price of many domestic goods to increase. The decrease in production could cause high domestic sugar prices to rise even more in Argentina. The Argentine government has put price ceilings on various foods but not sugar.
Sugar prices grew strongly in Argentina between 2018 and 2022. The Argentine sugar consumer price index increased from 122.8 to 1034 (134% price increase).
