Argentina’s Floods Head Toward Soybean Areas
In recent months, Argentina has had hope for a bullish grain market.
Fires in the southwest of the Buenos Aires province and floods in major producing areas like northwest of Buenos Aires, south of Córdoba, and south of Santa Fe have generated losses that could top 5 million metric tons. Nevertheless, there was a robust recovery in several areas of the country with adequate moisture that has boosted the yields.
Still, a new cold front has come from the south of Argentina, and that could affect some of the soybean and corn producing regions in the coming days. The rains are likely to last for five days. In Santa Rosa, capital of La Pampa province, there were already over 15 inches of rain acummulated over the weekend, and floods have devastated the city of Comodoro Rivadavia (1,094 miles from the city of Buenos Aires) in the province of Chubut. The La Pampa province has mostly livestock production. The precipitation is spreading to the south and west of the Buenos Aires province and soon could get to Córdoba and Santa Fe. The harvest of soybeans is about to start in all of those provinces, but yet just cloudy weather is seen in those regions with no reports of floods.
The newest crop update from the Rosario Board of Trade estimates a soybean production of 56 million metric tons. In the meantime, the Buenos Aires Cereal Exchange, which a week before had put the overall output at 54.8 million metric tons, elevated the projection to 56.5 million metric tons for the oilseed.
The report prior to last week of the Cereal Exchange said that there were rains that surpassed 3.93 inches in the central parts of Argentina, which means better conditions in the southwest of Buenos Aires, affected previously by drought, and worse conditions in other producing regions. “On the other hand, most places will beat the historical yield average,” reads the report. At its update on March 23, the expectation of better yields was confirmed by the Buenos Aires Cereal Exchange experts: Production would be over 500,000 tons compared with 2016.
For corn, the Buenos Aires Cereal foresees a production record of 37 million metric tons, while the Rosario Board of Trade projects 38 million metric tons. At this time, harvest already started in the earliest planted regions.
According to Pablo Adreani, a market analyst of Agripac in Córdoba, the corn production is something to worry about by the end of the crop, and it will also mean a strong competition for players like the U.S. “In 2017, Argentina will be the second-largest exporter of corn in the world and will have over 24 million tons of exports. Margins will vary outside of the major regions,” he said in a tweet.
In the meantime, there is an expectation of a record corn crop in Brazil with projections around 90 million metric tons of output adding more pressure to prices.