US, Argentine grain belts seeking moisture boost from El Nino -Braun

Moderately strong El Nino conditions have formed in the Pacific Ocean, and forecasters are confident they will last into early 2024, possibly bringing relief to some dry grain production areas of the Americas.

That replaces the La Nina cycle that lasted nearly three years and introduced severe drought to the U.S. Plains and Argentina over the last year. Those impacts still linger despite the flip toward El Nino, which occurs when surface waters in the equatorial Pacific Ocean are sufficiently warmer than normal.

Sea surface temperatures in the important Nino region last month were 1.3 degrees Celsius above average. Those August levels typically precede “super” El Nino episodes, though this year’s event may not reach that status, potentially affecting precipitation levels in early 2024.

SOIL REVIVAL?
Replenishing moisture in the Americas is vital given the current status. This week, some 58% of U.S. corn areas are experiencing drought, well above the five-year average of 20%. Soil moisture across Argentina’s grain belt remains unusually low ahead of its summer growing season.

The U.S. drought data extends to 2000, and there are no prior instances of comparable drought levels coinciding with El Nino conditions. Drought across the Corn Belt notably worsened from fall to spring during just one of the stronger El Nino winters: 2002-03.

El Nino tends to benefit the wheat-heavy southern U.S. Plains during the winter more than the corn-heavy Midwest. Only 20% of stronger El Ninos feature below-average precipitation in top winter wheat grower Kansas during the critical months of March and April.

In the U.S. Midwest, March and April have a very slight tendency to be drier than normal when coming off a stronger El Nino cycle, so abundant springtime moisture is not necessarily a given.

RESULTS TO BE SEEN
Argentina earlier this year harvested its worst soybean and corn crops in decades, though the switch to El Nino has not yet curbed the drought as hoped. Production outlooks for the country’s in-progress wheat crop have already been cut at least 15% from initial forecasts.

Argentina, the leading exporter of soybean products, rarely has a poor soy harvest during an El Nino cycle, and the last instance was long ago. All of Argentina’s worst bean yields have coincided with La Ninas.

One potential explanation for the recent drier weather in Argentina is that the pressure and temperature patterns across the entire Pacific Ocean are at odds with El Nino. This climate variability, known as the Pacific Decadal Oscillation (PDO), is in a strong negative, La Nina-supporting phase.

The negative PDO could limit El Nino’s strengthening in the next few months and contribute to its eventual demise, especially if PDO remains in this state through year’s end.

Global forecast models this week set nearly equal chances of either El Nino or neutral conditions by May or June, suggesting El Nino could be gone by mid-2024. That is statistically sound as stronger El Ninos typically do not sustain for a second El Nino cycle in the following year.

It is too early to know whether a neutral state or another La Nina may be in store for later in 2024, so potential agricultural impacts are also unknown. In 2016, markets were worried that a transition from El Nino into La Nina would hurt the U.S. corn crop, which ended with strong yields after plentiful rainfall.

However, the Corn Belt was mostly drought-free at this point in 2015 and through mid-2016.
Source: Reuters (Editing by Leslie Adler)