Heat, dryness ratchet up in South America
With the Polar Vortex far behind us, lets start this morning's commentary off with a look at what's been going on in South America. As of this morning little in the way of precipitation is occurring across the growing regions of Argentina and Brazil, despite a few light showers across Santa Catarina and Parana.
Before I get to the forecast, lets examine recent rainfall. Over the last 90 days, a few regions have seen particularly heavy rainfall. This includes Rio Grande do Sul, Sanata Catarina, Parana, and Mato Grosso. These 3 states account for aroung 65% of Brazil's soybean production. A drier belt of weather has been situated across Minas-Gerais and Sao Paulo, where % normal rainfall over the last 90 days is generally 60-80%.
Looking at the last 30 days of rainfall, this dry slug of weather has trended even drier with % normal rainfall over the last 30 days ranging from 20-60%. Southern and eastern Paraguay has also been notably dry with % normal rainfall in the 30-60% normal range. These drier regions of Brazil account for roughly 8% of Brazil's soybean production.
Goias and Mato Grosso do Sul account for around 20% of soybean production, and these areas have generally seen normal to slightly drier than normal weather. Across Argentina, the vast majority of soy production land has seen plentiful rainfall during the last 90 days, with % normal rainfall averaging 100-120. The La Pampa-Cordoba corn belt has seen less 90-day rainfall, with % of normal rainfall ranging from 70-90%. Over the last 30 days, however, noticeably drier weather has occurred across the main soy and corn regions of Argentina.
Across the soy belt of N Buenos Aires- S Santa Fe - E Cordoba, % normal rainfall is only 30-80% of normal, with 25-80% normal across the corn belt. Examining the long-range forecast, no adverse weather is expected across Brazil, albeit a warmer/drier pattern for Rio Grande do Sul and Sao Paulo. Across Argentina, however, both the American and European models show extreme heat intensifying across the soybean and corn belts the next few days, peaking Sunday-Tuesday.
While there are disagreements regarding how long this heat wave lasts, it does appear that at least a few days will occur with high temperatures reaching the 98-105 degree range. This heat will occur in tandem with a dry pattern to further reduce soil mositure, leading to worsening growing conditions for many of the key productivity regions. The European model does offer some substantial rainfall to central and southern Buenos Aires next week, missing most of the soybelt to the north.
In summary, good weather for most of the Brazil soybean belt will continue, while stressful growing conditions will continue across much of the Argentina growing regions. Normal to above normal yields continue to be favored for Brazil, which could total production to an astonishing 90 MMT.
Across Argentina, the USDA predicts total soybean production to reach 54.5 MMT. If yield reductions occur, which should be expected to at least some degree based off of current growing weather, total production may be under this estimate. Preliminary yields across Mato Grosso, Brazil's #1 soybean producing state, have averaged over 46 bu/acre.