Linked In
News In
Linked In

You are viewing your 1 complimentary article.

Register now to receive full access.

Already registered?

Login | Join us now

Morning markets: new year, same weather concerns lift crops

Twitter Linkedin eCard

New year, same old weather concerns.

The problem of South America's polarised weather, delivering too much rain in central Brazil, and too little further south into Paraguay and Argentina – with heat too – did not appear in any way resolved as of Tuesday.

Indeed, the weekend saw temperatures of up to 40 degrees Celsius (104 Fahrenheit) in central Argentina, posing a threat particularly to pollinating corn, although some other parts, and Paraguay, were a little cooler.

Rainfall was hardly abundant, where it is needed, either. (There was plenty in Brazilian states such as Mato Grosso and Minas Gerais where moisture has been plentiful.)

The extremes are being blamed on the La Nina weather pattern.

Polarised pattern

Rio Grande do Sol, a southern Brazilian state where dryness is the issue, saw "scattered light rain showers" on Sunday and Monday "which for the most part were under half an inch", weather service said.

Some parts of Paraguay saw a little rain too.

But Argentina was dry throughout the weekend.

"The late Monday afternoon satellite picture shows that once again all of central eastern and northern Argentina as well as all Paraguay, south eastern and south west Brazil to be completely clear of any sort of clouds and any sort of thunderstorm activity," said.

Heat dome ahead?

Nor does the outlook appear much more promising.

"The weather models did not show any significant change with regard to the rainfall and heat over Argentina, Paraguay and portions of south east Brazil over the next several days."

There is some chance of a cooler front this weekend. But next week, one weather model "tries to develop another heat dome", which would move from the southern Pacific into Argentina.

'Shift demand to the US'

As for the impact on crops, Abiove, the Brazilian oilseeds industry group remained upbeat, with a forecast for Brazil's soybean crop, which in some areas is in the early stages of harvest, of 74.6m tonnes.

However, that forecast acknowledged no allowance for the poor weather of late,

Anecdotally, reports are coming in of water being trucked to some southern parts of Brazil for humans and livestock, such is the extent of drought, and corn chopped for silage, and in Argentina of poorly-developed corn being resown with soybeans, which can be later seeded.

All this has impacts for crop prices, of course.

"Traders are focusing on Argentina's corn crop as it is approaching its key development period of pollination," Lynette Tan at Singapore-based Phillip Futures said.

"Persistent dryness and rising temperatures in Argentina threaten the next harvest. That could shift demand to the US, the world's leading corn exporter."

Palm springs

Many US financial markets remained closed early on Tuesday, so any reaction was not seen in Chicago, (which will reopen with the live session later).

But in Kuala Lumpur,

palm oil

saw a gain, adding 1.7% to 3,228 ringgit a tonne for March delivery as of 09:00 GMT. Argentina is the top exporter of rival soyoil.

Palm oil was helped too by concerns for weather in Malaysia too, which is also suffering La Nina-inspired problems, this time of too much rain.

"Fears of heavy rains in Malaysia's top palm oil producing states of Johor and Sabah that could trigger both harvesting and shipment delays are offsetting expectations of a likely weak demand outlook for the vegetable oil," Ker Chung Yang, at Phillip Futures, said.

Factory growth

Also a help was a more upbeat macroeconomic picture, with beginning-of-the-month purchasing managers' index readings for December from Australia, China and India showing improvement.

Australian manufacturing output grew for the first time in six months, while China's (according to an official figure complied by the China Federation of Logistics and Purchasing on behalf of the National Bureau of Statistics – not the HSBC one released last week) edged 1.3 points higher to a reading of 50.3.

Readings above 50.0 indicate expansion, and below, contraction.

This helped the


off to a soft start to the year, down 0.2%, while fostering gains on Asian stock markets. Shares added 0.7% in Tokyo, 1.2% in Shanghai and 2.7% in Seoul.



added 1.3% to nearly $109 a barrel.

The better mood helped


rise in New York, adding 0.2% to 91.96 cents a pound.

The fibre, which a non-food item is more linked to the economic mood, was one of the farm commodity sector's worst performers last year, with a drop of 37%.


Twitter Linkedin eCard
Related Stories

Evening markets: Wheat futures dip despite looming EU cold. Cotton climbs

... while soymeal sets a fresh 19-month high, only to lose most of its gains in late deals. Soybean futures hit an 11-month high

'Positive signals' for Europe's ag machinery market, despite regulatory hangover

Sentiment in Europe’s agricultural equipment market is at its strongest in nine years, industry group Cema says

World phosphate, potash shipments to grow in 2018, helped by Chinese needs

Mosaic forecasts further demand expansion, as it heralds a "transformational year" for its own fortunes, after a 2017 marred by a one-time tax charge

Morning markets: Soybean futures hit 11-month high, as Argentina worries mount

Concerns over dryness in the South American country hand soymeal a fresh 19-month high too. US dryness concerns buoy wheat and cotton
Home | About | RSS | Commodities | Companies | Markets | Legal disclaimer | Privacy policy | Contact

Our Brands: Comtell | Feedinfo | FGInsight

© 2017 and Agrimoney are trademarks of Agrimoney Ltd
Agrimoney is part of AgriBriefing Ltd
Agrimoney Ltd is registered in England & Wales. Registered number: 09239069