Good weather so far | U.S. corn, soybean supplies expected to be tight, raising the need for big crops in Brazil and Argentina
The markets are counting on South American farmers to produce bumper corn and soybean crops, and growing conditions appear to be co-operating, says a weather expert.
“What I’m looking at, at the moment, is a relatively normal pattern. We’ll see periods of dryness, we’ll see periods of rain, but it should all come out as being a generally favourable production year,” said Drew Lerner, president of World Weather Inc.
Grain and oilseed markets are antsy coming off a disappointing U.S. harvest, in which drought drastically reduced corn and soybean yields.
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Markets are relying on a big South American crop to meet global demand when the United States runs out of supply.
The U.S. Department of Agriculture forecasts that Brazil will, for the first time, supplant the U.S. as the world’s largest producer and exporter of soybeans. It estimates 81 million tonnes of Brazilian soybean production and 37.4 million tonnes of exports in 2012-13.
Argentina is the bigger player in corn markets. The USDA forecasts 28 million tonnes of production and 18.5 million tonnes of exports, which would make Argentina the second largest exporter of the crop behind the U.S.
Lerner has read market commentary from analysts who are already fretting about hot and dry conditions in Brazil.
He said Brazilian farmers traditionally start planting their crops in mid-to-late October, but some growers have bumped up seeding into September in an effort to get more acres in the ground.
“The whole reason why they didn’t plant in September before is because it wasn’t always a good month of rain,” said Lerner.
“Sure enough, September was hot and dry and that got some people thinking Brazil was in for a crop wreck. Everyone got all bent out of shape.”
Fears were heightened by reports that El Nino had stalled. Australia’s weather office last week said sea temperature changes associated with El Nino have suddenly stopped.
Lerner read one analysis stating that would lead to drought in South America.
“El Ninos in South America make it rain a lot. It’s just really wet,” he said.
“If you don’t have El Nino, it doesn’t mean you’re going to have a dryness problem. It just means it’s not going to rain excessively.”
Lerner said the diminishing El Nino means other weather patterns will control what happens in South America and he sees things shaping up nicely.
“We are expecting to see a normal evolution in rainfall across Brazil,” he said.
Rain is expected to pick up in late October and early November as moisture systems that develop in the Amazon River basin bring relief to the southern portion of the country.
“I feel very confident that the moisture will eventually be there, but I’ve been telling people that we won’t see widespread generalized rains until we get to November,” said Lerner.
His forecast calls for a dryness trend developing in northern Argentina in December and January but that is primarily cotton growing country. The rest of Argentina is expected to receive timely rain throughout the corn and soybean growing season.
