Argentina, Brazil in Talks to Flush Dam Water Into Dry Soy River

Argentina, Brazil in Talks to Flush Dam Water Into Dry Soy River

Parana levels lowest in more than three decades after drought. Argentine grain exporters can’t load carriers to full capacity

The governments of Argentina and Brazil are in talks to release water from the giant Itaipu Dam with a view to topping up the Parana River, where ebbing levels are stymieing a $20-billion-a-year crop export business.

Diplomats from the South American neighbors will hold a fresh round of talks on Friday, according to an official at Argentina’s Foreign Ministry. Brazil requires power from Itaipu, one of the biggest hydroelectric plants in the world, for its energy needs, but it has shown willingness to help Argentina, which is suffering from the low river levels, the official said.

A drought over the southern hemisphere summer means the river is at its lowest level since 1989, costing Argentina’s crop traders money at a time when the soybean harvest is starting to roll in. The country is the world’s biggest exporter of soy meal and soy oil.

The water level in Rosario, a key Argentine port city, is just 78 centimeters (31 inches), nearly five times lower than the average for this time of year, according to government data. Exporters have lost three feet of loading capacity in bulk carriers, which means they’re filling as much as 7,500 fewer metric tons, depending on the ship.

Eventually, it may be difficult for crushing plant-port complexes to receive cargoes trucked in by farmers at the usual pace, tightening supply to the global soy-meal market, said Esteban Moscariello, a trader in Rosario for brokerage house Diaz Riganti Cereales.

Topping up at sea ports in the Atlantic is also adding to logistics costs.

Belgian dredging company Jan de Nul is doing emergency work to add depth to the river channel. But with dryness persisting, the water could continue to ebb more quickly than its dredgers can dig, said Gustavo Idigoras, president of crop crushing and export group Ciara-Cec, whose members include the so-called ABCD giants of agricultural trading.

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