NAPERVILLE, Illinois, Feb 6 (Reuters) - Rainfall across Argentina’s grain belt last month was a touch lighter than in January 2023, shortly before what was perhaps the country’s worst-ever summer harvest.
This year’s crops will be remarkably better than last year’s, though rainfall in January, typically Argentina’s wettest month, was around 18% below normal levels and concentrated in the first half of the month, introducing plant stress in some areas.
However, December precipitation was 80% above average and was the wettest relative month for Argentina’s grain belt since mid-2020, replenishing parched soils after a three-year bout with the dry weather-inducing La Nina pattern.
Argentina’s upcoming corn harvest is expected to be about 60% larger than last year and the soy crop is seen doubling, though the latest three-week stretch of dry and hot conditions challenges the further upside Argentine agencies have suggested.
The U.S. Department of Agriculture is set to update its global supply and demand forecasts on Thursday, and analysts see Argentina’s soy and corn crops expanding very slightly from last month’s estimates.
USDA last month upped its 2023-24 Argentine soybean crop estimate to 50 million tonnes versus 48 million in December, the agency’s first January increase since 2007. Only four of the 17 harvests since then have been larger than what USDA projected in December, the most recent being 2015-16.
Soybean crop increases from January to February, as the trade is expecting, are relatively uncommon, occurring three times since 2006-07.
Recent crop outlooks from Argentine exchanges support the upward move with soy pegged at 52 million-plus metric tons, though the estimates are at least a couple of weeks old now.
Last week, Argentine soybean conditions fell to 36% good or excellent (GE) from 44% a week earlier, and the portion in poor shape rose to 14% from 8%. These are very similar to the same week in 2022 (37% GE, 18% poor), a harvest that featured below-average yields.
At this point amid last year’s disastrous harvest, soybeans were 14% GE and 42% poor, though in 2020 they were 65% GE and 0% poor, and yields fell a bit below trend that year, suggesting point-in-time crop conditions may not be all-revealing.
Relief may be arriving by late week. Based on Tuesday’s weather models, the next two weeks may contain above-average precipitation for Argentina’s growing areas with near-average temperatures overall. That moisture, plus the ample amounts observed late last year, could make for Argentina’s best yields in five years.
Although deterioration has likely occurred in the latest couple of weeks, last month’s average soil moisture across Argentina’s grain belt was the highest for January in at least five years and up 35% from a year ago, potentially allowing for more stressful weather.
That marks a huge relative improvement from a few months ago as grain belt soil moisture in October had been the month’s lowest in at least five years. Karen Braun is a market analyst for Reuters. Views expressed above are her own.
(Writing by Karen Braun Editing by Matthew Lewis)
