KANSAS CITY — Southern Hemisphere summer crop conditions vary widely with a little stress in each of the three continents where summer grain and oilseed is produced. The most serious stress is actually in Australia, where a new drought has prevailed for months, hurting the dryland production of corn, soybeans, sunseed and cotton over east-central portions of the nation. However, dryness in Argentina seems to be having the greatest influence on world commodity trade, and the situation likely reached a peak recently when multiple days of 90- to lower 100-degree heat affected portions of corn and soybean country at a critical time in crop development.
Argentina already had lost some production potential earlier this growing season, and turning around those losses was not very likely because of the more recent weather adversity. The biggest losses were expected to come from the nation’s early corn crop and sunseed production areas where, for the second time in this growing season, crop conditions became seriously stressed.
The first bout of stress occurred early in the growing season when October was dominated by unusually dry weather and some notable bouts of heat. November rolled along and brought some relief to the nation’s most important early season crop development potential, and it looked as though the nation’s hostile weather was over. But conditions deteriorated again in December resulting in stress for corn, sunseed and peanut crops. Some of the early soybean crop had been planted and was establishing at that time, but dryness was a growing concern for them, as well. The stress level in late December reached a seasonal peak just before the New Year’s holiday with market interest in the crop peaking for a little while.
Shortly after the New Year’s holiday, rain and thunderstorms developed throughout the summer grain and oilseed production region resulting in notable relief for the nation’s most important grain and oilseed production region from Cordoba to Entre Rios. Crop areas to the north and south were missed by the early January event, and by the time mid-month arrived, crops were dealing with limited soil moisture, no rainfall and a new bout of excessive heat.
The lack of precipitation was beneficial for aggressive fieldwork, and the harvest of winter wheat concluded quickly. Areas north and south of central Argentina remained too dry after the New Year’s rain event, and it was not until the weekend of Jan. 11-12 that significant rain finally fell from Santiago del Estero to northern Santa Fe and Corrientes. By mid-month, southern corn, sunseed and soybean crops were becoming severely stressed by dryness since the region had not been sufficiently relieved of dryness in early January. A new bout of extreme heat was affecting central portions of the nation during the second week of January, and the stress levels were starting to rise significantly once again. The period Jan. 15-19 produced the most stressful conditions of the growing season in southern corn and sunseed production areas with extreme heat pushing temperatures back into the high 90s and lower 100s Fahrenheit stressing crops as they moved through the reproductive process.
Soybeans, unlike early corn and sunseed, were managing the dryness better than most crops, but it was becoming imperative that a general soaking of rain needed to fall soon to stop the decline in production potential. Dryness and heat were at a critical point in many central and southern crop areas during the Jan. 15-19 period, making an advertised rain event for the week of Jan. 20 another potential million dollar rain event. The nation stood to lose a tremendous amount of grain and oilseed production potential if the Jan. 20-27 rain event failed to produce significant rain.
At the time of this writing, some important rain was advertised to fall in much of Argentina by the publishing date. Most likely, by the end of January, there will have been some significant rainfall in much of Argentina’s crop country offering to greatly ease crop stress and change the production outlook for soybeans, peanuts and late season corn and sunseed.
Leading into the significant precipitation event topsoil moisture had been exhausted in all of La Pampa, San Luis, southeastern Cordoba, far southern Santa Fe and western, southern and central Buenos Aires. At the same time subsoil moisture was running short as well, and that kind of dryness coupled with the hot temperatures was severely stressing many crops, and production potentials were on the line. The remainder of Cordoba and southern Santa Fe were also quite dry at the topsoil moisture level, but subsoil moisture conditions were still favorable enough to carry on crop development with a more restricted amount of stress. Northern portions of the nation were still counting their blessings from the storm system that brought significant dryness relief in the preceding weekend.
World Weather, Inc. was anticipating a sufficient amount of relief Jan. 20-27 to stop much of the immediate concern over crop conditions, but warned producers that there may still be one more wave of heat and dryness in February.
The third area of concern over dryness in the Southern Hemisphere was South Africa. The nation also produces corn, soybeans, sunseed, and sorghum during the summer and unlike Argentina, the dryness noted was more localized and confined to some of the westernmost production areas. Overall, South Africa has seen a more favorable weather pattern for its summer crops relative to those of Argentina and eastern Australia, but if timely rain fails to evolve over in late January and February it, too, may suffer some small production cut.
The one country in the Southern Hemisphere that does not have to worry about any production cuts because of dryness is Brazil. The nation planted a huge crop of soybeans, and its early corn crop is large as well. Weather conditions during the growing season, so far, have been nearly ideal. There have been some short-term bouts of dryness and moisture surpluses, but from most perspectives it is hard to find anything wrong with the crop. The harvest numbers will be huge, and there is a fair chance that production from Brazil will be sufficient to counter some of the losses anticipated from other Southern Hemisphere production areas.
The impact of Brazil production on this year’s commodity prices is sure to be downward. Argentina may have provided some short-term bounces upward in futures prices over the past few weeks, but when all of the summer crops in the Southern Hemisphere have been realized it will not take long to see that Brazil will be the final deciding factor for future commodity prices until the next U.S. crop gets into the ground.