Lin Tan of the DTN progressive farmer explores the impact of the Argentina drought on corn and soybeans. He notes the stress it has placed especially on late-planted fields.
BUENOS AIRES, Argentina (DTN) — Drought conditions in Argentina are putting severe stress on corn and soybean crops, which are in the critical development stages.
“We saw a high variability on the aspects of the crops associated with rain distribution, plots management, soil quality and previous crops,” said Ignacio Greco, broker and agronomist at Mercoplate S.A., a brokerage company in Buenos Aires. “It is not easy to generalize the crop conditions and hard to estimate the final yield so far.”
The newly published weekly report from The Buenos Aires Grain Exchange (BAGE) cut its estimate of Argentina soybean production to 44 million metric tons (1.62 billion bushels), down 3 mmt (110.2 million bushels) from its estimate last week. The report also estimated 52% of the crop is under drought. “Fifty-eight percent of the area is at a critical stage for yield definition under adverse conditions and without chances of recovery for the most developed plots,” stated the report, which was released March 1.
USDA estimated Argentina soybean production at 54 mmt (1.98 bb) in its last WASDE report in February.
These production declines are significant in comparison to the previous year.
Successful Farming showcases other aspects of this dry spell in their article courtesy Reuters. They have noted that this is Argentina’s worst drought in decades. The impact has been to drive the grain markets higher. Ultimately this reduction in production will impact the livestock industry with higher costs as well.
The drought in Argentina, the world’s No. 3 exporter of corn and soybeans, has not ended a scenario of global oversupply left by years of bumper harvests driven by good weather and genetically engineered crops.
But combined with separate bouts of dryness threatening crops in U.S. Plains states and South Africa, losses in Argentina are eating into global reserves and prompting global buyers to accelerate purchases.
Farmers in the U.S. Midwest are scrambling to sell grain that has been held in storage for months to take advantage of prices rallying on Argentina’s struggles.
The timing of the drought may be fortuitous for Midwest U.S. farmers as bills for key input costs such as land rent and seed will come due shortly.
Bryce Knorr of Farm Futures notes that today’s forecast contains rain for Argentina’s central growing region. But he highlights that the one and two week forecast predicts hot and dry conditions. Noting the impact on the market Knorr writes:
Soybeans couldn’t hold a higher open as rains moved into the central part of Argentina’s growing region, but a drier forecast for the next two weeks kept selling modest.Two-week outlooks are conflicted for precipitation chances over the Plains, which face another dry week before better chances of moisture could emerge.
The drought in Argentina was moving the grain markets last week as well. The grain markets will continue to react to the precipitation forecast in Argentina in the near term.
Image Courtesy Successful Farming