La Nina makes its presence felt; Argentina dry, Australia wet

The water in the Pacific east and central equatorial region is cooling and climate forecasters say we are officially in a weak La Nina.

However, the situation already appears to be influencing weather.

Just before I delve into the La Nina situation, I’ll draw your attention to the Statistics Canada crop production report that came out Dec. 6, after our deadline.

We have same-day coverage at Producer.com and will have analysis in next week’s paper.

La Ninas at this point in the year tend to deliver dry weather to Argentina and excess rain to Australia, and that is what we are seeing this year.

Dryness in Argentina is becoming a concern as farmers there move to the halfway point of seeding. Farmers might hold back planting until they get rain needed to germinate the seed.

The worry helped nearby soybean futures climb above $10 a bushel on Dec. 4, but there is a strong level of resistance at that point and the January contract closed just below $10 but still the highest price in a month.

And this weekend, heavy rain fell in parts of eastern Australia where farmers were trying to harvest their wheat crops.

A small amount of crop might be lost to flooding but mostly the worry was that the rain would downgrade the quality of the harvest.

In the end, the rain accumulations and coverage were not as large as forecast and so the market said “ho hum” and refocused on the wheat oversupply coming from the Black Sea region.

Turning back to South America, the situation has shifted in just a few months. Remember, our winter is their summer.

Going into the seeding season, soils in central Brazil were exceptionally dry, but the transition to the summer rainy season has been good, alleviating the dryness concerns.

Brazilian forecasters last week revised their production outlooks slightly higher.

But in southern Brazil and Argentina, rain accumulations are below normal.

Brazil is the major South American soybean producer, with the United States Department of Agriculture forecasting a 108 million tonne crop, down from the record 114 million tonnes last year.

The USDA sees Argentina’s crop at 57 million tonnes, down slightly from 57.8 million last year.

While it is the smaller producer, Argentina has a large crushing industry and is the world’s largest exporter of soymeal.

So, if the weather stresses its crop, the impact might be felt the most in meal prices.

Given that Argentina is still only at the seeding stage, no one is pushing the panic button just yet.

But the La Nina is expected to persist through the next few months, keeping the odds loaded in favour of continued dry weather in Argentina.

The Western Producer recently reported on the La Nina winter prospects for Canada. While we’ve had mild conditions recently, the forecast is for more cold and snowy weather this winter.

The other La Nina factor to keep an eye on is the impact on the U.S. southern Plains where the hard red winter wheat crop is produced.

La Nina tends to deliver warmer and drier than normal winters to the southern U.S.

In the final crop condition report of the year last week, the USDA pegged the crop in hard red winter wheat country poorer than last year at the same time due to dry conditions since seeding.

But there is little correlation between fall condition reports and final yields. Much depends on rain early next spring once the crop comes out of winter dormancy.

Will La Nina release its grip early or will it continue into our spring?

We don’t know, but we’ll continue to monitor.

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