January 30, 2009

 

Argentina's corn and soy crops received a slight reprieve from the worst drought in 50 years that could trim expected losses in soy production, industry members said Thursday (January 29).

 

Fields in the central farming provinces of Buenos Aires, Cordoba, Entre Rios and Santa Fe received up to 30 to 40 millimetres of precipitation Tuesday and Wednesday, up from average rainfall of 10 millimetres that fell in erratic and scattered showers in recent months.

 

"Soy still need more rain but this was helpful," Sebastian Olivero, director of agriculture consulting firm Agro-Tecei Consultores, told Dow Jones Newswires. "It will keep crop estimates stable instead of in freefall."

 

Argentina, the world's third-biggest exporter of corn and soy, and the leading exporter of soymeal and soyoil, is suffering its longest dry spell since the 1950s-60s.

 

So far this  year, many parts of the farm belt have seen the lowest precipitation in 47 years, with a reduction of between 40 percent and 60 percent from historic averages, according to the Buenos Aires Cereals Exchange. This led the exchange last week to cut its 2008-09 soy production estimate to between 34.5 million to 38.2 million tonnes, or 17 percent to 25 percent less than the 2007-08 season's 46.2 million tonnes.

 

The crop "needs more water but something fell and so the plants can hold on a big longer," Olivero said. "We don't have to keep dropping estimates every week. If there is more rain soon this will help maintain yields and production."

 

He said he is expecting soy production of between 41.5 million and 43.5 million tonnes this season.

 

By comparison, the US Department of Agriculture is forecasting Argentina will produce a record 49.5 million tonnes of soy this season.

 

Weather forecasters like Eduardo Sierra of the Buenos Aires Cereals Exchange and Matias Bertolotti of Weather Wise Argentina suggest there may be a change in the longer-range weather pattern, and that more generalized rains could hit in February.

 

On Tuesday, Bertolotti said he is expecting two storms next week to bring 50 to 60 millimetres of rainfall over wide areas of the farming heartland instead of the 10 millimetres from isolated showers in recent months.

 

"There is a chance that things won't be so bad" for the soy crop, Olivero said. "More water is needed but this was a big help."

 

With forecasts of more rain, "there could be a surprise" in soy production, said Carlos Boglioli of the Roagro grain brokerage in Rosario, Santa Fe. "There could be a slight recuperation" as the soy plants start to flower.

 

"The harvest will be less than expected but we have to watch for what happens in February," he said. "There is talk of rain in February so we have to see."

 

For the corn and sunflower crops, "the rains arrived late," said Olivero. There was not enough soil moisture to help the crop develop in large parts of the farm belt.

 

The exchange suggests output will plunge by 33 percent to 40 percent to just 12.3 million to 13.7 million tonnes from 20.5 million tonnes in 2007-08. The USDA expects 18 million tonnes of corn to come from Argentina this season.

 

Sunflower seed production is expected to fall between 20 percent and 32 percent from the 4.65 million tonnes grown last season, according to the exchange. The USDA is expecting sunflower seed output of 3.8 million tonnes.