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Beneficial rains for Argentina’s soybeans do not cancel La Nina risks -Braun

Argentina’s core grain belt is on pace for better rainfall this month than has been seen in many recent Novembers, but with La Nina in action and planting still in progress, the country’s soybean crop remains at risk of a third consecutive disappointment.

February and March are usually the most important weather months for optimal yields in Argentina, though rainfall through the planting period also correlates well with crop potential, so comfort levels would increase if next month’s rainfall can follow November’s showing.

As of Thursday, Argentina’s soybeans were 32% planted, about the same as both last year and the recent average. The country’s soybean planting dates have been very reliable since the progress has barely fluctuated in the last several years, and sowing should be nearing 90% complete by the end of December.

The probability of truly good soybean yields in Argentina is only one in 10 during a La Nina, which happens when surface waters in the equatorial Pacific Ocean are cooler than normal. The phenomenon occurred last year, too, and the country’s soybean and corn yield fell short but avoided total disaster.

Based on data from the past three decades, Argentina’s soy areas have a one in five chance of normal or above normal rainfall in December when La Nina is as strong or stronger than it has recently been.

La Nina is linked with drier weather for Argentina’s summer growing season, but it is inaccurate to say that rainfall cannot be normal or even above if the cool phase is present. The better way to describe it is to say that most of Argentina’s driest years coincided with La Nina’s presence.

The good news is that global climate predictions, both numerical and human-judged, see La Nina potentially fading faster than last year in the early months of 2022. That could allow for rainier conditions during Argentina’s critical period.

The latest readings across the Pacific Ocean’s surface show that the waters have reached their coolest overall levels in nine months and the current strength is comparable with a year ago.

Last month, the top layer of equatorial ocean waters notched their coolest anomalies in 11 years, which had triggered the historically strong 2010-11 La Nina. Argentina’s soy and corn yields were poor that year but nowhere near as bad as during the comparably weaker La Nina of 2017-18.

OVERALL REDUCTION

It has been three years since Argentina has turned out strong soybean yields (2018-19 harvest), but output was limited due to a recent decline in plantings. Production reached 55.3 million tonnes that season, below the record of more than 61 million set four years earlier.

Unfavorably high export taxes for soybeans and soybean products versus rival crops like corn and wheat have boosted plantings of those crops versus soy. Argentine farmers are now harvesting a soy area more than 15% smaller than at the recent peak nearly a decade ago.

Argentina remains the overwhelming leader in soybean product exports, but the downtrend in production of the oilseed has helped competing product suppliers such as Brazil and the United States maintain steady roles in global trade.

Argentina is the No. 3 or 4 raw soybean exporter, and although the Brazilian and U.S. volumes swallow up the Argentine ones, all three rely heavily on China for business. Argentine soybean meal has many destinations, but Indonesia, Vietnam and Spain sit among top customers, while India is most interested in the country’s soybean oil.

Many analysts believe soy plantings for 2021-22 could be Argentina’s lightest in more than a decade. The Buenos Aires Grains Exchange sees the upcoming crop at 44 million tonnes, though the Rosario exchange and the U.S. government have friendlier outlooks at 48.8 million and 49.5 million, respectively.
Source: Reuters (Editing by Matthew Lewis)

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