Jan 22, 2021

Wet South American Forecast Weighs on Ag Prices

Still a need for additional rain to fix moisture deficits

South American Weather Less Threatening

  • Much of Brazil outside the northeast saw several waves of rain during the past week.
  • Argentina’s crop areas have been hot and dry this week after experiencing a good mix of rain and sunshine over the previous ten days.
  • Enough rain fell to bolster soil moisture and support better crop conditions compared to earlier in the growing season.
  • Brazil’s two-week forecast remains favorable as a good mix of rain and sunshine will continue except in parts of the northeast.
  • Relief from current hot and dry weather is expected in much of Argentina starting this weekend in the north and Tuesday elsewhere.

FBN’s Take On What It Means: There is still a need for additional rain to fix moisture deficits. Early season corn production cuts are not reversible, but soybeans, and late corn can benefit from timely rainfall and have better potential production if conditions are good through February. South American weather risks persist. Mato Grosso will need periods of dry weather late this month and in early February to allow soybeans to be harvested as quickly as possible to prevent further delays to planting of the second season corn crop.


Argentina Crop Progress & Condition Update

  • The soybean crop was rated 21% good to excellent, up from 18% last week but well below last year’s 59%.
  • The crop was 46% blooming with 5% setting pods, meaning that weather remains critical.
  • Argentina corn planting is 93% complete compared to 91% last week and 95% last year.
  • Corn conditions also improved for the week with 28% rated good to excellent, up from 19% last week but well below last year’s 59%.
  • About 31% of the crop is silking, so like soybeans, weather is key right now.
  • Timely rains are in the forecast for the coming days and could at least sustain current condition ratings.

FBN’s Take On What It Means: The improvement in conditions mainly is thanks to beneficial rainfall last week. But, weather remains important and will continue to be key in the coming weeks. As has been said previously, there is little room in balance sheets for additional crop production losses, whether corn or soybeans. The condition updates are a negative input regarding futures, but recall USDA is looking for a record crop already in South America.

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Kevin McNew

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Marketwatch: Jan, 18

US Corn Price Idx: ZCPAUS.CM

open: 5.7667
high: 5.8486
low: 5.7266
close: 5.8288

US Soybean Price Idx: ZSPAUS.CM

open: 13.366
high: 13.376
low: 13.2328
close: 13.2696

US Hard Red Winter Wheat Price Idx: KEPAUS.CM

open: 7.3061
high: 7.3384
low: 7.2334
close: 7.2454

US Soft Red Winter Wheat Price Idx: ZWPAUS.CM

open: 7.0114
high: 7.0566
low: 6.9566
close: 7.0014