South America: Widespread deficits intensify in Southern Cone, Guianas

25 May 2023

THE BIG PICTURE
The 12-month forecast ending in January anticipates widespread, intense deficits in almost every region of South America. Additionally, small areas of notable surpluses are expected in isolated areas in the Bolivarian Nations.

Exceptional deficits are expected to occur in:

Peru, widespread throughout the country. Areas throughout the region of Ucayali, the city of Lima, and southern territories of the Zona Reservada Santiago-Comaina can anticipate the most intense deficits.
Venezuela, spanning much of the country, with the exception of areas near the regions of Medio Ventuari and Yacapaca, as well as Serranía La Neblina National Park.
The Guianas, with exceptional deficits occurring in western to central French Guiana. The Tapanahony region of Suriname can expect similarly intense deficits, as well as northern, central, and southeast Guyana.
Brazil, covering the vast majority of the country. The regions of Minas Gerais, northeastern Para, Rondonia, and Bahia are expected to experience the most dense areas of deficit.
Uruguay, throughout the entire country.
Northern and southern Chile, covering much of both regions, with the exception of the Aysén Region, which can anticipate moderate to severe deficits.
Northeast Argentina, throughout northern areas of the Buenos Aires province.

Moderate to severe deficits are anticipated in the following areas:

Northern Brazil, in the state of Amapá.
Southern Brazil, throughout the state of Rio Grande do Sul.
Northeast Argentina, in the Santa Fe Province.
Eastern French Guiana, near the commune of Regina.

Areas expected to observe extreme to exceptional surplus include:

Southeast Peru, in areas north of Lake Titicaca. These surpluses continue further east into Bolivia’s Madidi National Park.
Northwestern Argentina, along western regions of the Catamarca Province bordering Chile.

Northern Colombia, in southern regions of the La Guajira department. The same region can also expect small pockets of extreme to exceptional transitional conditions.

The 3-month maps (below) show the evolving conditions in more detail.

FORECAST BREAKDOWN
The forecast through July 2023 anticipates intense deficits to continue throughout the continent. In Venezuela, areas near the western city of Barinas can anticipate exceptional deficits, as well as places nearby the Canaima National Park. These deficits continue southeast into northern Brazil, as well as throughout the Guianas. Central and eastern Brazil will continue to experience deficits of varying intensity throughout the regions, as well as southernmost Brazil, which can anticipate exceptional deficits in the state of Rio Grande do Sul. Similarly intense deficits are forecast throughout Uruguay, as well as eastern areas of Argentina.

From August through October 2023, exceptional deficits in eastern Argentina are expected to linger but lessen in intensity, becoming extreme to severe. Similar deficits are expected to continue throughout the Guianas, as well as northern Brazil. Further west, a mixture of moderate and exceptional deficits are anticipated to occur throughout southern and central Peru. These anomalies continue north, moving into southern and central Colombia.

The forecast for the final months – November 2023 through January 2024 – anticipates most anomalies to downgrade in intensity to mild or moderate, with the exception of exceptional deficits occurring in north Chile. Moderate to severe deficits are also expected to continue throughout northern Brazil and the Guianas.

Please note that WSIM forecast skill declines with longer lead times.

IMPACTS
On May 11th, Brazilian Finance Minister Fernando Haddad expressed concern over economic ramifications of Argentina’s current drought. Haddad said Brazil was “keeping a close eye on Argentina,” where the drought could potentially reduce exports by 20%. Haddad also acknowledged the emergence of extreme-right governments in Latin America resulting from drought-related economic stress, stating to U.S. Treasury Secretary Janet Yellen that he is worried “this situation may affect the political destiny of Argentina." Haddad stated that he raised the issue with Yellen because Argentina needed assistance from the International Monetary Fund.

After drought hindered Argentina’s corn and soybean production during the 2022-2023 season, persistent dry conditions are expected to similarly affect the country’s 2023-2024 winter crop production. Last year, similarly dry growing conditions reduced Argentina’s wheat crops by 33% year over year, with production dropping 43%. As Argentina is the second largest producer and exporter of wheat in the Southern Hemisphere, its supply plays a major role in providing the rest of the world with wheat once stock in the Northern Hemisphere has been sold. Drought readings in Argentina’s primary wheat production areas are currently at their second highest level in nearly 20 years.

Albemarle Corp announced hopes to expand its lithium operations in Chile through the use of direct lithium extraction technology (DLE) by 2028. This technology requires large amounts of freshwater to filter lithium from underground brine. As Chile is experiencing a long drought, using water for mining has the potential to cause issues with indigenous communities, as well as threaten wildlife. "Depending on environmental and other permits needed in Chile, as well as scaling technologies, we believe (DLE) should be implemented, if everything goes well, towards 2028 or 2029," Ignacio Mehech, Albemarle Corps’ Chile manager, said during an interview.

NOTE ON ADMINISTRATIVE BOUNDARIES
There are numerous regions around the world where country borders are contested. ISciences depicts country boundaries on these maps solely to provide some geographic context. The boundaries are nominal, not legal, descriptions of each entity. The use of these boundaries does not imply any judgement on the legal status of any territory, or any endorsement or acceptance of disputed boundaries on the part of ISciences or our data providers.

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