Dry weather is in the forecast for South America, but they could be getting a bit of a break soon. Allendale commodity broker Greg McBride said that there?s some decent rain in the 6-to-10-day forecast for South America that could help lower the risk of drought stress.
?We are still seeing some dryness in southern Brazil and Argentina in the 1-to-5-day forecast, but now they?ve added some rain in the 6-to-10-day forecast,? McBride said. ?It?s actually pretty significant in Argentina this morning, so that?ll look good for us. This is the one shot we?ve got right now of significant rains. Now, obviously, we?ve cooled off some of the conversation about drought, dryness, and stress, but it is still a lingering issue that we?ll continue to talk about. With the 6-to-10-day forecast having some good rains, that?ll help ease some of those fears, and then the 11-to-15-day, which doesn?t necessarily come through every time, is back to a little bit of a drier pattern. It does still have some rain in it, but not enough to really move the needle at this point.?
McBride also provided a harvest and planting update for Brazil.
?Harvest for soybeans is moving right along- well ahead of the 5-year average sitting at 26%,? McBride said. ?The 5-year average comes in at 16%. Last year at this time, they were only 7% harvested, so they continue to move forward. A couple of weeks ago- last week especially- they were having some issues with a little bit too much rain in some of those bigger areas- Mato Grosso especially- where they were not moving along as fast as they wanted to. This is an area that had planted very early, and they were expecting to be a little bit further along, but they are ahead of pace. That will continue, and they?ve started to see some progress moving along this week. Now when we start to look at corn, their corn harvest, again, is ahead of the 5-year average. They?re sitting at 29% right now- that is ahead of the 5-year average at 21%. This time last year, they were at 22%, so still moving along very quickly on that corn harvest. As they get the soybeans out, they?re planting their safrinha crop- that is at 27% planted currently, which is well ahead of the 5-year average of 18%. Remember last year- this is about the time where things started to dry out for Brazil, and that second corn crop really started to see some problems as far as getting planted in dry conditions and then carrying through their whole cycle with drier conditions as well.?
Last week?s CONAB report shook the markets quite a bit. McBride said that the harvest projections might not be as bad as they thought once the combines actually get in the fields.
?We put in at least the short-term high for corn, beans, and wheat on that move from CONAB,? McBride said. ?With that big cut in production that CONAB made to beans, it might?ve been a little bit too much because it didn?t leave anything left for everybody to wonder if it?s going to get worse. By the time their net numbers come out in March, they should be far enough along in harvest that scale tickets or combine yield monitors will start to show the real story. That?s not to say that there weren?t problems throughout, but we seldom see it as bad as expected once the combines get rolling. With what we?ve seen here recently, we have backed off since last Thursday?s CONAB numbers in corn and beans. The big thing we continue to watch is not necessarily South America related. It?s more the situation in Russia and Ukraine. Monday, we were all over the board with whether or not they?ll invade. This morning it sounds like they?re back to not invading. They?re starting to move some of their troops away from the border. That is a good sign, and that is also taking some of the risk premium out of the market. Currently here on Tuesday morning, we are down 22 cents in beans, 15 in corn, and wheat is down anywhere from 20 to 30 cents.?
The team at Allendale can be reached by calling 800-262-7538, or you can visit allendale-inc.com.
