Improved weather conditions in South America reduce speculative pressure on agricultural markets

Traders are closely monitoring the weather conditions in South America, where excessive rains continue in Brazil and precipitation deficit remains in Argentina. At the same time, a new wave of frosts is expected in the United States and Ukraine, which could affect winter crops that do not have snow cover.

During the week, the rainfall in Central Brazil decreased, which allowed to resume harvesting soybeans and accelerate the sowing of corn safrinha. However, next week in the key region of soybean production – Mato Grosso – the intensity of the rains will increase, which will increase pressure on the quotes.

In the arid regions of Argentina this week, the front brought heavy rainfall, which will improve the condition of crops, preventing the reduction of the potential of the future harvest. Next week, the next front will bring new precipitation, which will reduce the heat and improve moisture reserves.

On February 5, the Buenos Aires Grain Exchange (BAGE) confirmed that heavy precipitation in key agricultural regions of Argentina has significantly improved the level of soil moisture for spring crops.

In the regions of winter wheat production in the United States this week there were rains and warming, but in the North of the Great Plains remains cold weather, which next week will spread to the South, which will reduce temperatures and increase snowfall in the Midwest and Central and Southern Plains. In the Northern Plains frost can damage winter wheat crops that do not have snow cover, which has already led to speculative growth of wheat prices in the United States.

Heavy rains have raised the water level in the Mississippi River, a key transportation artery for grain exports. Precipitation will continue for several more weeks, so in some areas the water level may reach critical levels.

In Ukraine, the weather is dry and frosty, with temperatures of -5…-8°C at night and around 0…+1°C during the day, which reduces moisture reserves in the topsoil and negatively affects winter crops, which have begun to resume vegetation amid the abnormal heat.

Experts of the National Academy of Agrarian Sciences of Ukraine note that during the first two months of the calendar winter there were no significant reasons for damage or death of crops. December and January were characterized by relatively stable temperatures, which were above the average annual norm.

“During this period, we recorded 41 days with an average daily temperature above 0°C. Similar phenomena are observed annually, especially in the southern regions. Experience shows that a gradual decrease in temperatures before severe frosts does not cause significant damage to crops, especially if there is snow cover,” the review says.

Given the current state of winter crops and weather forecasts, scientists do not expect significant threats to crops in the final stages of the winter period.

In the South-West of Russia, key winter wheat growing regions also experienced a precipitation deficit. However, due to the warm and rainy weather in December and January, the condition of the crops improved. The absence of severe frosts will help to avoid significant crop losses.

The weather remains relatively dry in most European countries. However, in the west of the continent, rains are expected on Friday, which will have a positive impact on crops in Spain, Italy and northern Africa. At the same time, France will remain too wet, and the eastern regions of Europe – too dry, which may adversely affect the condition of crops.

Tags: wheat, USA, crop condition, Ukraine, corn, prices, soybean