Feb 20, 2018

Argentina Soybeans at Risk from Hot and Dry Conditions

Author: Michael Cordonnier/Soybean & Corn Advisor, Inc.

The weather last week in Argentina was once again dryer than normal, but with some cooler temperatures at least during the early part of the week. The temperatures were so cool in fact that they had a frost on Sunday night (February 11th) in parts of central and southern Buenos Aires, southern Cordoba, and Sao Luis. Loses from the frost will be localized and the total extend of the damage is still being determined.

There were some scattered showers across western and central Argentina over the last few days and the forecast is calling for a few more showers this week. The rains will certainly help where they fall, but I don't think they will be heavy enough to reverse the overall dryer trend in Argentina.

The general soybean condition in Argentina is rated 56% poor to very poor and the soil moisture is rated 75% short to very short according to the Buenos Aires Grain Exchange. The soybeans are generally rated better in northern Argentina and lower in southern Argentina. The early-planted soybeans are rated a little better than the late-planted soybeans. The soil moisture is better in northern Argentina and dryer in southern Argentina.

The overall development of the soybean crop in Argentina is 25% vegetative development, 29% flowering, 26% setting pods, and 20% filling pods. From mid-February to mid-March is the critical time for much of the soybean crop in Argentina because the majority of the crop will be setting pods and filling pods. The soybeans in Argentina are at a similar stage to what we would see in the U.S. in early August.

All the estimates in Argentina are declining due to the hot and dry conditions and also due to some frost damage a week ago in parts of central and southern Buenos Aires province. Some estimates in Argentina are already down 10 million tons from last year's production of 57.8 million tons.

It's not entirely all bad news in Argentina. Some of the best soybeans (and corn as well) are found in northern Argentina where the rainfall has been much better since early January. It is not a big production area, but they have had the best weather over about the last two months.

Several weeks ago, I thought that potential reductions in Argentina's soybean production would be compensated for by increases in Brazil's soybean production. I no longer have that opinion. I now feel the losses in Argentina will exceed any potential gains in Brazil's soybean production.