Usually, rains in South America are seen as a good thing. However, the recent rains in Brazil actually slowed down harvest progress. Allendale commodity broker Greg McBride said that rain event will just about be the last one for a while as he took a look at the South American weather forecast.
?Well, in Southern Brazil, Argentina, and part of Uruguay, we have a very dry and a little bit warm bias over the next ten days,? McBride said. ?There?s really only one major rain event in that timeframe, and that is concerning. One of the reasons we?ve seen these rallies in the beans and the corn here recently is because of the outlook for a lack of grain, and that continues right now in the 1-to-5-day and the 6-to-10-day timeframe.?
McBride also provided an update on Brazil?s soybean and corn harvest progress and safrinha planting progress.
?Soybean harvest is at 17%,? McBride said. ?That?s up about 6% from last week, about 14% over where they were last year, and 7% ahead of the 5-year average. A little bit of something to watch here is that they actually feel like they?ve been slowed down by some heavier rains in parts of Montenegro- so some of the northern portions of Brazil. When we move over to the corn, they are 26% harvested on their summer crop corn- that?s their first crop corn. That is also ahead of the average from last year and the 5-year average by about 11 to maybe about 8% over the previous years, so that looks pretty good. We?re not hearing anything at this point about concerns over yields on the early planted acres. It?s going to be the later planted and maybe some of the southern acres that are not quite at maturity yet that we have some big issues with. Looking at the safrinha crop for Brazil- that?s their second crop- that would be planting currently. They?re at 18% planted. That is up 7% from last week. That is way ahead of the pace from last year at this time- they were at 4%, with the average being at 11% for the 5-year. They?re definitely moving along. We knew that was going to be the case, obviously, from the early planting and early harvest of soybeans in Brazil this year. That is something to be watching for. We do expect that they are going to have a pretty sizeable corn crop down there as far as the second crop corn- that?s where the bulk of their corn comes from. At this point, there?s still going to be some concerns in that southern portion of Brazil as La Nina still has a hold on that area.?
McBride added that we?ll see the effects of South America?s current weather conditions in tomorrow?s WASDE report.
?We are going to see- or at least we feel like we?re going to see- some drops in the production numbers from both Brazil and Argentina,? McBride said. ?Last month, the USDA came in at 139 mmt for Brazil?s corn, and we?re looking at an average guess of somewhere down around 133.5 mmt, so a pretty sizeable cut. We have seen numbers that have been lowered to anywhere from 125 mmt up to 128 mmt as well, but those are a little more extreme. About 1.5 million tons were dropped off of Brazil?s corn, so still a very big crop at 113.63 mmt. Obviously, the biggest concern we have there is most of that corn comes in on the safrinha crop, so we will have to continue to watch the weather patterns down there. When it comes to Argentina, they have minor cuts to their production- from 54 mmt on corn down to 52.16 mmt, and then on beans they?re looking at a drop from 46.5 mmt down to 44.5 mmt. Again, those are a little bit concerning. It?s one of the reasons that you see bean meal kicking higher because Argentina is the world?s largest exporter of bean meal, and they are the number three exporter of corn as well. Even though they don?t produce nearly as much as Brazil, they are still a big factor when it comes to the world?s shopping market.?
The team at Allendale can be reached by calling 800-262-7538, or you can visit allendale-inc.com.
