Argentina’s main route to the sea beginning to dry up

The Parana River in Argentina is at its lowest level since the 1940s, and the decreased flow is beginning to become a problem. Meandering thousands of miles through the Argentine pampas, the river is the main transport artery for Argentinian commerce.

Decreased depth means that grain traders have been forced to reduce how much they load on cargo vessels. Reduced volumes lead to higher costs, and a knock-on effect ripples through the supply chain.

Low flow’s are also affecting hydro-electrical generation, leading to increased imports of diesel to fuel power plants.

A combination of reduced exports and increased imports means the country’s trade surplus and the peso are suffering. Belen Rubio, an economist at MAP in Buenos Aires, says “if the shallowness of the Parana persists in the medium term, it’s a problem”.

“Argentina has a hard-currency shortage so even a minimal outflow of dollars to import additional energy adds uncertainty,” said Marcelo Elizondo, an Argentine consultant who specializes in trade. “The question is how long this lasts for.”