Showers over the weekend were not enough to quiet worries about Argentina’s drought.
Soybean and corn prices fluctuated Jan. 26, depending on competing weather models showing either hot dry weather or more showers for this week.
The drought has already done damage.
Early this week, Argentina began rejecting applications for wheat export permits while the government assesses the country’s production, demand and reserve requirements.
Argentina, normally a top five wheat exporter, saw its crop wilt to the smallest level in 20 years.
The government’s latest wheat production estimate is 8.3 million tonnes, down from its nine million tonne estimate in December.
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The country normally consumes six million tonnes domestically and exports its surplus, mostly to neighbouring Brazil.
Argentina was already forecasting much smaller than normal exports and now might not export at all, in which case Brazil will be looking to buy from somewhere else.
The wheat harvest is already complete and the dry weather is now harming soybeans and corn.
Last week the Buenos Aires Grains Exchange said soybean production could fall by 17 to 25 percent from the exchange’s estimate of a 48 million tonne crop last year.
That would put output at 36 to 40 million tonnes, which compares to the latest U.S. Department of Agriculture forecast for Argentina of 49.5 million tonnes.
The exchange also said corn output could fall by 33 to 40 percent from the 21.06 million tonnes produced last year, which would put production at 12.64 to 14.11 million tonnes.
The latest USDA forecast is 16.5 million tonnes.
The exchange’s forecast is dire, but the soybean crop has not yet reached the critical pod filling stage.
On Jan. 26, weather forecasters said the jet stream would shift, allowing rainstorms to track closer to Argentina’s cropping regions, raising the potential for better moisture.
Argentina’s problems have caused oilseed prices to rally from their December lows.
In recent weeks, several analysts have said the rally presents a good selling opportunity.
In the past couple of years the spring acreage war between U.S. corn and soybeans caused a preseeding rally, but the battle for seeded area is not expected to be as aggressive this year because of weaker demand.
I don’t like to make recommen-dations on when to sell, but I can point out there is a risk in waiting for higher canola prices this winter.
