Unusually dry February renews risk to Argentina’s soybeans and corn

After plentiful January rainfall that saved Argentine corn and soybeans from potential disaster, this month is on pace to be the country’s second-driest February in more than three decades, once again raising harvest concerns.

Bumper crops were never expected in 2021 for the No. 3 corn and soybean exporter, but last month’s rainfall had some estimates on the uptrend. Crop conditions remain stable, though forecasts suggest Argentina is nearly two weeks away from its next substantial rainfall opportunity.

Soybean planting began in earnest in November, while corn planting started more than a month earlier. Rainfall between October and December hit a 10-year low across the country’s grain belt, and soil moisture reserves were at a 12-year low for the time of year by the end of December.

January rainfall was nearly 30 per cent above the month’s recent average. That set crops up well to enter the crucial yield-formation stages in February and beyond, but precipitation has again turned sparse.

The rest of the month will likely remain dry, with weather models as of Thursday predicting the first week of March could feature the next round of rains.

Total rainfall this month will likely be just half of what is normal. February 2018 was the driest in at least 30 years, some 75 per cent below the five previous years. Thin rainfall throughout that entire season coupled with hot temperatures led to one of the most disastrous harvests on record.

Crop conditions are holding up well despite the dry spell. This week in the top three provinces of Cordoba, Buenos Aires and Santa Fe, the portions of soybeans rated good or very good were 87 per cent, 84 per cent and 98 per cent, respectively. Those are all within 3 percentage points of the end-of-January scores.

Corn in Buenos Aires is 4 points better than three weeks ago at 93 per cent good or very good, and Santa Fe corn is unchanged at 89 per cent. But corn in Cordoba stands out among the other scores with just 69 per cent good or very good, down 2 points in three weeks.

Cool temperatures have been a saving grace for the Argentine crops, and the grain belt is on pace for the coolest February in more than 20 years. Temperatures over the next couple of weeks are forecast at closer to normal levels and possibly a bit above, but excessive heat is not in the cards.

There are not many years with which to compare given such a dry February, and while that condition is not necessarily a death sentence for the crops, there are some varying circumstances.

For example, strong soybean and corn yields were observed in 2019, and that February was the third-driest since at least 1988. January 2019 rainfall was plentiful as in 2021, but unlike the present season, precipitation was abundant in late 2018 during planting and soil moisture was closer to average. March 2019 rainfall was also average.

History suggests that Argentina’s corn and soybeans, like crops in the United States, can combat hot temperatures with high rainfall or low rainfall with cool temperatures, and the latter has helped prevent failure in 2021.

Last week, the Rosario grains exchange bumped its 2020-21 forecast for Argentina’s soy harvest to 49 million tonnes from 47 million previously. Corn rose to 48.5 million from 46 million, and those improvements were based on the abundant January rains.

On the same day, the U.S. Department of Agriculture left its outlook for soybeans and corn unchanged from the previous month at 48 million and 47.5 million tonnes, respectively. USDA’s soy and corn yields would be three-year lows, about 10 per cent and 9 per cent below the long-term trend, so the agency is by no means expecting a stellar performance.

On Thursday, the Buenos Aires Grains Exchange kept estimates for both crops at 46 million tonnes after having pared estimates a couple weeks ago due to dryness, though it was suggested that the success of crops would depend on upcoming rain.

 

The Daily Star

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