BOSTON (Reuters) - Argentina’s soybean and corn crops are in still in the earlier growth stages and soils ended 2019 on the driest note in several years. But recent rainfall has been helpful and the temperature outlook in the Pacific Ocean has grown more supportive of good Argentine harvests.
Through the first third of January, rainfall in Argentina’s primary grain belt was running moderately below the monthly average, though December provided some much-needed relief.
Precipitation last month was above the recent average for the first time since June. In the months between, rainfall was 34% below normal in the key growing regions, the lightest in 11 years. As such, soils in December were the driest for the month since 2010, and 17% drier than a year earlier.
But the trend got better. The second half of December contained two of the five wettest days of the entire year for Argentina’s grain belt, and those were the wettest days observed in nearly eight months.
As of early Tuesday, weather models were on the lighter side for precipitation in the next 10 to 14 days. But given Argentina’s recent rains, the forecast amounts may be enough to keep concerns at bay for now.
The forecasts for sea surface temperatures in the equatorial Pacific Ocean are more favorable than they were a month ago, based on a stronger lean toward El Niño, which characterizes warmer-than-normal waters. It is uncommon for Argentina to have crop problems during such a phase.
International climate forecasters this month placed the odds for El Niño’s persistence during December through February at 52%, with the odds for neutral ENSO (neither El Niño nor its cool-phase counterpart La Niña) at 48%. That is a significant change from the same forecast a month earlier, which gave neutral ENSO a 70% chance versus a 27% probability for El Niño.
It is very rare for Argentina’s soybean yields to fall below the long-term trend when waters in the ENSO region are warmer than normal, and it is even less likely for corn.
Argentina’s corn and soybean planting seasons span a few months, but they are nearly finished. As of Thursday, soybean planting was 92% complete versus 95% a year earlier, while 88% of the corn area had been sown, identical to a year ago.
The corn was largely in the early growth stages as of late last week, though there was a fair amount either still emerging or beginning to pollinate. Soybeans were mostly in the early growth stages too, with only a small portion beginning to flower.
Both crops were mostly rated in good condition as of Thursday, but it is still early for this to indicate likely harvest outcome. During the same week in 2018, when a historic drought slashed yields, corn and soybeans were also largely considered in good condition, with some scattered reports of fair conditions.
The U.S. Department of Agriculture maintained Argentina corn and soybean production at 50 million and 53 million tonnes, respectively, when it issued new supply and demand figures on Friday, though based on USDA’s historical behavior, it is still early for sizable adjustments.
Dryness in Rio Grande do Sul in southern Brazil, which often has similar weather patterns and crop results as Argentina, has caused some concern for that state’s corn and soybean crops. But this should not significantly dent national production, though, and Brazil’s soybean crop is seen hitting record levels.
The last time that Argentina’s and Brazil’s corn and soybean yields were all excellent in the same year was in 2016-17. The harvests were pretty good in 2018-19, but dryness in key parts of Brazil clipped the soybean crop from initial expectations.
The opinions expressed here are those of the author, a market analyst for Reuters.
Editing by Matthew Lewis