La Nina’s toll on Argentina’s crops is being translated into official forecasts that lifted crop futures prices last week.
But even as that country’s soybeans and corn suffer, the recent torrential rains in California, reversing a long-term drought in that region, make me wonder if La Nina is finally losing its grip.
Later in this column I’ll look at European and Indian crops, but to start, let’s stick with La Nina.
The most recent readings by the U.S. weather service show it is still too early to bid farewell to La Nina’s over-long three-year stay, but it might be packing its bags for a departure by April.
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Last week, the Buenos Aires Grain Exchange slashed its soybean crop estimate to 41 million tonnes from 48 million previously due to La Nina dryness.
The exchange also trimmed its forecast for corn acreage but left the production outlook at 50 million tonnes for now.
The other grain exchange in Argentina, Rosario, went further, cutting its soybean forecast to 37 million tonnes from 49 million previously. It pegged the corn crop at 45 million, down from 55 million previously. It said it expected further cuts if there was not an immediate turn around in the weather. However, extended forecasts show little hope for a reversal of the drought.
The U.S. Department of Agriculture’s monthly supply and demand outlook also released last week took a cautious approach, trimming Argentina’s soybean crop to 45.5 million from 49.5 million previously. It pegged corn at 52 million, down from 55 million last month.
The USDA also revised its assessment of the American soy crop harvested last fall, lowering it to 116.4 million tonnes from 118.3. million. It cut the U.S. corn crop by five million tonnes to 348.75 million.
It raised Brazil’s soy crop by a million tonnes, to 153 million, with dry weather in the south more than offset by better conditions to the north. It trimmed Brazil’s corn outlook to 125 million from 126 million.
The prospect for a huge Brazilian soy crop limits the chance of a major rally in oilseeds.
While combines are already rolling on the earliest soybeans in northern Brazil, most of the continent’s crops have a couple of months of growing weather.
And while it might seem that there is a shift afoot, judging by the deluge in California, the scientists monitoring the El Nino-Southern Oscillation (ENSO) say the La Nina continues for now.
The equatorial sea surface temperatures, which determine whether we are in a La Nina (cold), El Nino (warm) or neutral stage of the oscillation are still colder than average.
However, the Jan. 12 report of the U.S. Climate Prediction Center said the equatorial waters are gradually warming. This means we should transition toward a neutral stage through the next few months and there is an 82 percent chance of it being neutral by the March-to-May period.
This transition stage brings with it much uncertainty and it is too early to say whether the ENSO will remain neutral this summer or move toward an El Nino status.
I should note that while La Nina tends to deliver dry weather to Argentina, across the Pacific it encourages wetter than normal weather. True to form, 2022 was the wettest year on record for Sydney, Australia. The moisture helped Australia produce record-shattering large wheat and canola crops this year.
The ENSO has little effect on Europe, most of which has enjoyed a much warmer than normal winter.
The warmth has allowed the continent to avoid worries that it would run out of natural gas, which was in short supply because the stream from Russia was cut off due to the war in Ukraine.
For agriculture, the warm winter has mixed impacts.
There is a modest moisture deficit in northern France and Germany and little snow cover. Crops are losing winter hardiness and are vulnerable if there is a sharp freeze.
In areas around the Mediterranean Sea, including Italy, Turkey and North Africa, the moisture deficit is more extreme.
There was a cold snap in northwestern Europe in recent days, but the general warm trend is expected to continue in Europe. Precipitation forecasts are less stable, but if the dry weather continues into spring, it could become an issue.
Turning to India, the winter growing season has been favourable.
A one percent increase in wheat seeded area has led the government to forecast record wheat production of 112 million tonnes, up from last year’s 106.8 million. Winter pulse area is also expected to increase slightly.
There are several months to go before harvest. Last year hopes for a record wheat harvest were crimped by a late season heatwave.
