FORT COLLINS, Colo. (Reuters) - Argentina’s upcoming corn and soybean harvests will not be among the country’s best on record, but they certainly seem to have averted possible disaster a la 2018 after a historically dry start.
Above-average rainfall in January went against the general dry trend common across Argentina during a La Nina, the cool phase of the equatorial Pacific Ocean. This brought much-needed moisture to the crops, which as of last week were mostly in good condition.
But the La Nina pattern is still in place, and Argentina is not yet out of the woods as the forecast has turned dry through mid-month, just as crops begin to enter the critical stages for yield formation.
As of Jan. 28, data from Argentina’s agriculture ministry suggested that the portions of soybeans in good or very good condition in Buenos Aires, Cordoba and Santa Fe were roughly 83%, 90% and 96%, respectively. Those three provinces account for three-quarters of the country’s planted area.
That compares with 94%, 91% and 94% in the same week a year ago. Both the corn and soybean harvests last year were largely average, though the corn results were relatively better.
But conditions at this time of year can still be elevated even in bad years. During the same week in 2018, soybean ratings in those three provinces were 78%, 87% and 81%. Seven weeks later, the scores had plunged by about a third after an abnormally hot and dry stretch, and the resulting harvest was among the worst on record.
Buenos Aires, Cordoba and Santa Fe account for a little more than two-thirds of the country’s planted corn area, and the amounts of corn rated as good or very good as of last week were 89%, 71% and 89%, respectively. The scores in the same week last year were 96%, 87% and 88%.
Back on Feb. 1, 2018, the corresponding ratings were 83%, 84% and 76%, but just as with soybeans, those numbers were chopped by a third come mid-March.
Analysts had somewhat low expectations for Argentina’s harvests this year due to the La Nina, which is known to cause dryness across Argentina and Southern Brazil. That was the main driver in 2017-18’s failure.
The 2020-21 crops got an even worse start than three years earlier, as rainfall in the last few months of 2020 hit a 10-year low. Soil moisture during planting was down from the 2017 levels by about 25%.
But the rains turned on last month, spreading more than 6 inches (152 mm) over Argentina’s grain belt, the largest monthly rainfall in exactly two years. But how was this possible with La Nina?
It is true that Argentina’s crop yields have a better chance of being below average during a La Nina cycle, but not all La Ninas are created equal, and phenomena even farther from South America than the Pacific can have impacts.
One key difference between 2021 and 2018 is the temperature pattern in the Indian Ocean, or the Indian Ocean Dipole, which influences global circulation patterns. This year, the eastern Indian Ocean is cooler than normal and the western is warmer, and that tends to weaken the effects of La Nina in South America.
The Indian Ocean exhibited the opposite pattern in early 2018, which amplified the effects of La Nina in Argentina and also allowed for the hotter temperatures to take hold. But this year’s pattern promotes cooler temperatures.
Another explanation for both the recent cooler weather and good rainfall in Argentina is the favorable phases of the Madden-Julian Oscillation (MJO). This tropical disturbance circles the globe and operates on a much shorter time scale than La Nina, which allows it to introduce counteracting effects relatively quickly.
DRY STRETCH AHEAD
February is an important month to observe favorable weather in Argentina as crops begin to move through blooming and pollination and into the filling period. But unfortunately, the month is starting on a dry note.
Forecast models as of Wednesday suggest relatively light rainfall for Argentina’s grain belt through mid-month. Luckily, temperatures will remain on the average to cool side, which will help the soils retain some of their newfound moisture.
Last week, the Buenos Aires Grains Exchange cut its forecast for the country’s soybean harvest to 46 million tonnes from 46.5 million, citing hot and dry weather. That is despite weather data suggesting an average to cool pattern prevailed for at least the last month.
The U.S. Department of Agriculture’s Buenos Aires office last week projected the corn crop at 47 million tonnes, a half million below the agency’s official estimate, due to drought damage.
USDA’s official estimation of the 2020-21 soybean harvest is 48 million tonnes, though that figure could be updated in the next round of reports on Tuesday. Analysts see soybeans at 47.64 million tonnes and corn at 47.03 million ahead of those reports.
Last year’s soy and corn crops totaled 48.8 million and 51 million tonnes, respectively, according to USDA data.
The opinions expressed here are those of the author, a market analyst for Reuters.
Editing by Matthew Lewis
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