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Still 'too early' to cut Argentine soy hopes, despite 'particularly erratic weather'

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US officials declined to follow other commentators in cutting expectations for Argentina’s soybean crop, saying it was “too early” for downgrades - despite acknowledging “particularly erratic weather” and reports of “burned leaves and stunted plants”.


The US Department of Agriculture bureau in Buenos Aires, in a report published overnight, although written earlier in the month, stood by an estimate of a 57.0m tonnes Argentine soybean harvest in 2017-18, down by 800,000 tonnes year on year.


“It is too early to begin projecting lower production as the situation is still evolving and more information comes in.


“As such, [the bureau] maintains its production estimate.”


‘Conditions could normalise’


The decision came even as the bureau acknowledged that “local analysts have begun to estimate lower production around 52m-55m tonnes”, with the Rosario grains exchange, for instance, cutting its forecast last week by 2.5m tonnes to 52m tonnes.


Also last week, the Buenos Aires grains exchange lowered its estimate for Argentine soybean sowings, pegged at 94% complete, by 100,000 hectares to 18.0m hectares, saying planting progress had been “paralysed” in some areas by a lack of rainfall.


And the USDA itself, in Friday’s Wasde report, reduced its forecast for the harvest by 1.0m tonnes to 56.0m tonnes.


“Conditions could normalise if rains occur soon,” the bureau said, although it noted that “observers doubt this will be enough to offset the unfavourable conditions that have hit the crop”.


‘Burned leaves and stunted plants’


The crop setbacks have followed what the bureau itself said was “particularly erratic weather, with heavy rains and flooding at the beginning of the season and excessive heat conditions in north Argentina and the province of Buenos Aires in late December/early January”.


Indeed, in its report, the bureau flagged “developing factors that could lower area planted, yields, and thus production for the season.


“High temperatures and the lack of enough rainfall during December and into the January have delayed plantings and stressed crops in northern Argentina and Buenos Aires provinces,” as the optimal sowing window closes.


And even some soybeans that have been planted is suffering, with reports in northern areas of “significantly high temperatures that are damaging crops, including five continuous days of temperatures around 35 degrees Celsius.


“In Buenos Aires province, there are reports of burned leaves and stunted plants in the north and central parts of the province due to dry conditions.”


Rain debate


The comments come as analysts are assessing the extent to which rains last weekend helped crop recovery, with a broad consensus that precipitation had come in short of expectations and requirements.


“Southern Argentina did not get as much wanted that they needed over the weekend,” said Terry Reilly at broker Futures International.


At Commonwealth Bank of Australia, Tobin Gorey said that “weekend rainfall in Argentina fell short of dispelling crop worries”.


However, at First Choice Commodities, Mike Mawdsley said that while Argentine weather was “less than ideal, there are not enough worries to mount a serious rally yet either” in soybean futures.


‘Temporary reprieve’


At Soybean and Corn Advisor, Dr Michael Cordonnier termed the weekend rains, which reached 2-3 inches in some parts of Cordoba province, as “a temporary reprieve from the long-term drought that has afflicted” the north of the country.


“More rain will be needed to recharge the depleted soil moisture.”


In Buenos Aires province, “rains were more scattered and lighter and generally less than” the amount of up to 2 inches that had been forecast.


“The recent rainfall in northern Argentina will help farmers finish the soybean planting in that region even though it is getting very late to plant soybeans,” Mr Cordonnier added.

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