Argentine soy scorched beyond return, season ‘dead’ – experts

BUENOS AIRES (Reuters) – Hope has withered for any recovery in Argentine
soy yields hit by a four-month drought that shows no signs of abating,
farmers and analysts said on Monday, prompting China to step in to fill
the gap in soymeal exports from the world’s No. 1 supplier.

The dryness that has blighted the Argentine Pampas since mid-November
has forced producers to repeatedly slash their estimates for the
2017-2018 crop. The light rains that are forecast for the days ahead
will not be enough to restore fields baked by an unrelenting southern

hemisphere summer sun.

“The current season is dead in terms of crop yields,” said German
Heinzenknecht, weather specialist with the Applied Climatology

“The showers that are on the way are not going to help soy or corn, but
they could improve planting conditions for wheat, which starts being
sowed in May.”

China’s 2017/18 soymeal exports are set to nearly double to around 2
million tonnes, traders said on Monday, lifted by lower Argentine
supply. Asian countries led by Japan, South Korea and Vietnam are key
importers of soymeal.

Argentina is the world’s third-biggest exporter of soybeans and corn, as
well as the top provider of soy-based livestock feed, used from Europe
to Asia to fatten pigs and cattle.

Sparse showers of about 1 centimeter (0.4 inch) are forecast for
Wednesday in the usually fertile Pampas grains belt, with 2 to 2.5
centimeters expected on Saturday, Heinzenknecht said.

“You can say, cautiously, that the weather will improve but not with the
velocity needed to end the drought.”

Argentine soybean exports are taxed at 28.5 percent, so the fiscal

impact of the drought could be hard as President Mauricio Macri prepares
to seek re-election next year while trying to cut the budget deficit and
fund infrastructure projects.

The disaster on the Pampas has exerted upward pressure on soybean and
corn futures on the Chicago Board of Trade.

Farmers in the U.S. Midwest are scrambling to sell grain that has been
held in storage for months to take advantage of prices rallying on
Argentina’s woes.

Analysts have slashed their soy crop forecasts, which started the season
in the range of 55 million tonnes, to below 45 million.

“It’s really awful around here. Yields are just falling and falling,”
said Pedro Vigneau, who operates a 1,400-hectare farm in the central
Buenos Aires district of Carlos Casares.

He now expects to harvest two tonnes of soybeans versus the 3.5 to 4
tonnes that he expected at the start of the 2017/18 crop year.

Vigneau has lowered his farm’s corn harvest forecast to about half of
the eight to nine tonnes estimated at planting.

“It might rain on Wednesday but the game is almost over. The impact of
the drought will be severe and the area affected is really wide. When
you speak with farmers from different areas you realize their fields are
almost all in bad condition,” Vigneau said.

Argentine is expected by the Buenos Aires Grains Exchange to harvest 42
million tonnes of soy and 34 million tonnes of corn in the 2017-18
season, down from prior estimates of 44 million and 37 million tonnes,

“The major area affected by the drought in the central and southern part
of the farm belt has no chance of recovering yields, even if it were to
start raining,” said Esteban Copati, chief analyst at the exchange.

When the exchange slashed its estimates last week it warned that dry,
hot conditions in northern provinces could lead to further reductions.

Temperatures are cooling as the Argentine summer draws to a close,
providing some help to parched crops, said Isaac Hankes, a weather
research analyst at Thomson Reuters’ Lanworth commodities and weather
forecaster. “The rainfall arrival is still about six days out in most
regions,” he added.

That would do little to resuscitate the country’s gasping soy and corn
fields, according to the Rosario grains exchange.

“Showers are expected in the second half of March, but that’s going to
be too late for the most part,” said Emilce Terre, head of research at
the exchange, located near the soymeal and soyoil plants that dot the
banks of Parana River.

“At this point, it if rains a lot over the next month all it would do is
complicate harvesting. It would be unlikely to help soy and corn
yields,” Terre said.


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