June 28, 2010

La Nina threatens US and South America's soy production

La Nina may hurt soy crops in the US, the world's largest exporter, and South America, should it cause a severe drought between early August and February, likely curbing yields, according to Telvent DTN Inc.

"If La Nina shows up in August, yes, it could contribute to damage to the US soy crop," said Bryce Anderson, chief agricultural meteorologist at DTN, a provider of market information to 700,000 clients across North America. It can certainly be a feature that leads to a reduction in the crop size in Brazil and Argentina, he said.

La Nina, characterised by colder-than-normal sea-surface temperatures in the Pacific Ocean, can change world weather patterns, affecting crop development. It can cause wetter than usual weather in Asia and below-average rainfall in parts of the US, Argentina and south Brazil. There is a high probability for La Nina to develop during India's June-to-September monsoon season, the weather office said June 25.

Output losses in the US, Argentina and Brazil, which make up 82% of global soy output, may end a 13% drop in prices in Chicago this year. Prices fell this year because of record crops.

Soy planting in Brazil, the second-largest producer, may be delayed by dry weather caused by La Nina, the Sao Paulo-based forecaster Somar Meteorologia, said June 23. The sowing season runs from September to November.

The critical time frame for the soy crop is pretty much during February in Argentina and Brazil, and early August in the US, when plants are most susceptible to heat, DTN's Anderson said.

La Nina may bring more rains to northeast China, boosting the nation's soy output, he said.

The weather pattern may damage crops in other parts of Asia should it arrive during the monsoon season, bringing heavier rainfall and flooding in growing areas, he said.