Some rain this week helped stabilize the crops in South America. However, Allendale commodity broker Greg McBride said that the next two weeks are looking very dry overall.
?In the 1-to-5-day, there is rain in both southern Brazil and Argentina,? McBride said. ?Not a ton. Just enough to kind of keep things stabilized there. What we are watching is the 6-to-10-day and the 11-to-15-day are very dry for Argentina. They actually do return to some warmer temperatures as well, so there will be a net drying effect down there. That?s one of the reasons we?ll point to why the markets have jumped the way they have here recently.?
McBride said the biggest issue is that there could be some hefty drops in production estimates in next week?s USDA report.
?The biggest problem we have is, as we go into this USDA report next Wednesday on the 9th, you?re already starting to see estimates coming out for dropping production levels- specifically in Brazil,? McBride said. ?There?s some production levels where the USDA was at a 139 mmt on the January report. There are some estimates out there saying they?re going to drop from that 139 down to about 128 or 125 mmt, so a major drop in production out of Brazil. That?s got the markets excited. Plus, when you look at the situation with soybean meal down there, prices have skyrocketed, and a lot of that is due to the drier conditions in Argentina. So, we?ve got a lot of concerns about South American production, and we haven?t even got to the point where we?ve started talking about the potential for drought in our own backyard.?
The team at Allendale can be reached by calling 800-262-7538, or you can visit allendale-inc.com.
