Drought in Argentina

[LuanaGomes]

Earlier this week Marketeye asked: How dry is Argentina? Well the answer came today, on a report released this afternoon by the Rosario Board of Trade. According to the report, the crops are still suffering a “severe water deficit” even after some areas of the country received rain. Corn fields, which are now undergoing the grain filling stages, got the worse of it. Plants are so damaged at this point that t low yields can’t be avoided anymore. “The lots are very uneven, but few lots that have no serious damage”, says the Rosario Board of Trade. Argentine farmers say production probably won’t even reach the 20 mmt mark, which would be a pretty bad outcome considering early estimates pointed to a 26 mmt corn crop.

Still flowering, soybean fields are still in a fairly good condition so far, but already starting to show signs of significant stress in some areas. “In general, plants are presenting a very low growth rate and may not reach enough leaf canopy to ensure the capture and efficient use of resources during grain filling”, says the report.

Over the past week Argentina finally got some rains, but precipitations amounts were uneven, varying from 2 inches in parts of Cordoba to as low as 0.20 inches in most part of the country’s grain belt. Temperature is still pretty high (above 90F), increasing crop stress even more. The soil moisture maps bellow show just how dry is Argentina. Comparing the December map (on the right) to the most recent one (on the left, as of Jan5), you will find that recent precipitation events helped shrink drought and abnormally dry areas (orange and yellow), but conditions are still pretty bad.

[marketeye]

Luana,

Your crop estimates are sharply different than the estimates in this Dow Jones Newswire story from October 26. Notice the story says Argentina farmers are set to smash corn production records this year. What a difference 60 days makes. I just thought it would  be interesting for folks to see the huge difference in what was expected, for Argentina, this year and then what the thoughts are now.

This story ran October 26, 2010:

BUENOS AIRES (Dow Jones)--Argentina' farmers are on track to break the record grain output seen last season, with production topping 100 million tons, the country's Vice Minister of Agriculture, Lorenzo Basso, said in an interview with Dow Jones Newswires Tuesday.
With soybean planting just kicking off, conditions are ideal after recent showers and prices are sky-high right now. Basso estimated that production would set a new record of 55 million metric tons this season.
Virtually all of that will be exported as either beans, meal or oil, he said. Argentina is the world's third largest soybean exporter after the U.S. and Brazil. Argentina leads the world in soymeal and soyoil exports.
Basso also said that China had resumed heavy soyoil buying after lifting a block on the trade earlier this month. The Chinese are likely to end the year with purchases similar to those in 2009, he added. China is the largest importer of soyoil and dealt Argentine exporters a stinging blow earlier this year when it blocked soyoil imports from Argentina, citing sanitary reasons. However, the move was widely seen as retaliation for barriers imposed on Chinese goods by Argentina amid a host of anti-dumping investigations.
Argentina, the world's third-largest corn exporter, is also set to smash last year's corn record, with between 26 million and 27 million tons grown, Basso said. That would be up sharply from the 22.5 million tons grown last year, according to the U.S. Department of Agriculture.
About two-thirds of the corn crop has been planted to date and conditions are good after recent showers. Basso said that about 70% of the corn crop would likely be cleared for export after about 8 million tons are set aside for domestic consumption. Argentina tightly regulates corn and wheat exports, only granting export permits once it has confirmed sufficient stocks for local residents.
While farmers worry that dry weather towards the end of the year due to the La Nina weather phenomenon may affect the crops, for now soil moisture levels are excellent across much of the farm belt.
That has boosted prospects for the developing wheat crop, with Basso estimating production of about 13 million tons. That's up a million tons from the Agriculture Ministry's current forecast.
Of that crop, Argentina, one of the world's leading wheat exporters, will likely ship almost 7 million tons, with most going to Brazil. Basso estimated domestic consumption next year at 5.5 million to 6 million tons.
Estimates for Argentina's 2010-11 crop production in millions of hectares or millions of metric tons [One hectare equals 2.47 acres]:
Wheat       Soy         Corn        Sunseed
   Ag Ministry        12MT        17.8HA      4HA         1.55HA
   USDA               12MT        50MT        21MT        3.4MT
   B.A. Cereals Exch  12.1MT      18.7HA      3HA         1.62HA
   Rosario Grain Exch 10-11.5MT   --          3.8HA       --
Argentina's historical production in millions of metric tons, according to the USDA:
Wheat    Soy    Corn    Sunseed
   2009-10            9.6      54.5   22.5    2.3
   2008-09            10.1     32     15      2.9
   2007-08            18.6     46.2   22      4.65
   2006-07            16.3     48.8   22.5    --
   2005-06            13.8     40.5   15.8    --
-By Shane Romig, Dow Jones Newswires; 54-11-4103-6738; shane.romig@dowjones.com
(END) Dow Jones Newswires
October 26, 2010 19:18 ET (23:18 GMT)
Copyright (c) 2010 Dow Jones Company, Inc.

[LuanaGomes]

Mike,

That story was written just before the country stared to dry out. When planting season started, in September, the argentine grain belt still had average to above-average rainfall amounts. But just a month later it was a completely different story, with below-average rainfall observed throughout the entire last quarter of 2010. Across the country, precipitations amounts for the Oct-Dec period were 4 to 8 inches below-average, with some isolated areas recording as much as 20 inches below-normal rainfall.

According to AgriPac (a local local agricultural consultant company) analyst Pablo Adreani “only a miracle can stop the damages trend” in the argentine crop. Soybean production, which was initially forecast at 55 mmt, isn't likely to top 40 mmt, AgriPac figure shows. At the best case scenario, considering both soybean and corn crops, Argentina should harvest 60 mmt of grains this summer. A pretty bad result for a country that only a few months ago expected to break the record grain output seen last season, with production topping 100 mmt this year.

Luana