Poor production: Farmers throw corn in South America. Drought and heat cut Argentina’s 2022 soy and corn yields to four-year lows, but the crops are in worse shape now. —AFP
RECENT rainfall across Argentina, the world’s leading soybean meal exporter and key corn supplier, has been the scarcest in over three decades, keeping the pressure on struggling crops.
Argentina’s soybeans and corn are still in the earlier stages of their seasons, behind normal development as the La Nina-induced drought slowed planting.
This delay could turn favourable if the dry pattern permanently broke, but dryness is forecast to persist for at least the next two weeks.
Parts of the grain belt have received decent precipitation within the last several days with some areas totalling close to two inches (51 mm) over the last two weeks. For comparison, average rainfall in January, the grain belt’s wettest month of the year, is around 4.7 inches (119 mm).
But Argentina is starting in a significant moisture hole given that La Nina, the cool phase of the equatorial Pacific Ocean, is hanging around for a third consecutive season. The last third of 2022 was the driest in at least 35 years, about 44% below normal and 34% drier than the same period last year.
Drought and heat cut Argentina’s 2022 soy and corn yields to four-year lows, but the crops are in worse shape now. However, many industry forecasts, including those from the US government, expect better soy and corn yields this year versus last.
According to the Buenos Aires Grains Exchange, some 28% of Argentina’s soybeans were in fair or bad condition, up from 25% a week earlier. Only 10% was good or excellent, up from 12%. That compares with 57% good or excellent and 8% fair or bad in the same week last year.
For corn, 28% was fair or bad last week, up from 26% a week earlier and well above the year-ago 8%. Good or excellent corn totalled 15%, unchanged on the week but much worse than 58% last year.
Those ratings may not account for the most recent rainfall, but any improvement in this week’s conditions could soon deteriorate due to the predicted dry and warm weather combination through mid-month.
The calendar year of 2022 was the driest in Argentina’s grain belt since 2008, which started with a strong La Nina that had begun in mid-2007.
A weak La Nina episode repeated in late 2008 through early 2009, and Argentina’s 2009 soybean harvest was terrible, likely the worst on record.
Weather will matter for Argentina’s soy and corn through at least March given the later development.
Early last month, US government forecasters gave La Nina a 50% chance of persisting through the January-March period, dropping to 26% in February-April. The forecast will be updated soon.
La Nina has not yet officially loosened its grip, but whether it does in the next several weeks could be the difference between OK and horrible crops for Argentina.
Although uncommon, it is not unprecedented for La Nina conditions to fade over a period as short as three or four weeks.
If relief does not arrive in time for Argentina’s 2023 harvest, there may be hope for 2024. After the awful 2009 showing, El Nino developed in mid-2009, bringing plentiful moisture for the successful 2010 harvest.
Additionally, there have been no quadruple La Nina events since at least 1950. —Reuters
Karen Braun is a market analyst for Reuters. The views expressed here are the writer’s own.
