Home / Markets / Markets Analysis / Corn market / SA drought; Beginning or end

SA drought; Beginning or end

Ray Grabanski 01/31/2013 @ 10:25am President, Progressive Ag www.progressiveag.com

The southern South American (SAM) drought has extended itself another week, with the predictable response by the market to rally to new weekly highs this week in both corn and soybeans.  The dry weather in South America comes on the heels of wet weather in December that delayed planting there for awhile.  The dry weather to end December and start January was critical to allow these wet areas to get the crop planted prior to the end of the planting season.  Most of the work got done, albeit later than normal, and the season was off to a relatively good start for most of South America.

The shift to wetter weather in northern Brazil in January and the drier weather in southern SAM was initially considered beneficial to the crop.  

Private crop estimates of the Brazilian crop have gone up, not down, in January as the most recent private estimates are showing even larger record large Brazilian crop production.  The dry weather in southern Brazil is causing crop losses, but the wetter weather in northern Brazil is pushing yields there back up to high levels - much above last year's drought reduced crop.  

The key question right now is how much damage has occurred in Argentina, where the dry weather has persisted through most of January?  Soil moisture levels there to start the month were saturated, but the past four weeks of dry weather has meant an about face for these areas.  Basically, as we end the month of January, there is little stored soil moisture left in Argentine soils.  

The next seven days to start February include relatively dry weather continuing, with below normal precip levels forecast for the coming seven days.  However, there is some rain in the forecast, more than the previous few weeks, and it will help to prevent rapid yield loss in these areas.  Also, temps through most of January were not high, and just this week have risen to levels where they are now above to much above normal in Argentina.  This is a new development, and could adversely harm Argentine yield prospects as we enter February.  

On the other hand, today's 8-14 day forecast puts wetter weather back into the Argentine forecast, with some heavy rains possible in some areas.  While the 8-14 day forecast is historically not very accurate, this forecast has been there for the past 3 days - indicating a stability to the forecast that is pervasive.  

Will Argentina turn wet in February, a "just in time" development for southern SAM?  

CancelPost Comment

When and Where was picture taken? 02/01/2013 @ 7:54am Where and when was the picture taken? All too often pictures don't match the story. A picture speaks a 1000 words but it is better when the words match the story.

Report Abuse Reply
MORE FROM RAY GRABANSKI more +

Rehedging With a 'Mammoth' Crop in… By: 08/26/2014 @ 6:17am Pro Ag yield estimates keep rising. Our corn yield is now nearing 174 bushels per…

Record-shattering Yields Expected By: 08/19/2014 @ 7:18am Crop conditions improved 1% yesterday in soybeans to 71% G/E, with this now the highest rated…

Soybean Conditions Stabilize; Replace Hedges… By: 08/12/2014 @ 7:25am Crop conditions showed little change yesterday, with corn conditions unchanged at 73% G/E and…

MEDIA CENTERmore +
This container should display a .swf file. If not, you may need to upgrade your Flash player.
Holiday Profit Taking Pressures Markets