(Agrimoney) – Weather in the next few days will prove “critical” to determining the extent of soybean area loss to poor weather, the Buenos Aires grains exchange said, as it cut by 300,000 hectares its forecast for sowings of the oilseed.
The exchange cut to 19.3m hectares its estimate for Argentine soybean sowings this year, taking the year-on-year decline to 800,000 hectares.
The revision reflected a downgrade to 1.35m hectares to the sowings estimate for the south east of Buenos Aires province, where drought has prevented farmers realising seeding plans, and with the planting window for the area now closed.
However, the final sowings figure will depend on the progress of “abundant” rains further north which have “delayed the finalisation of sowing in the centre” of the soybean belt, where farmers have a little time yet to complete plantings, the exchange said.
‘Flooding concerns’
“The evolution of the climate will be critical in allowing the finalisation of planting plans in the centre of the agricultural region during the next two weeks,” the exchange said.
It highlighted the plight of central parts of Entre Rios, where “abundant rains” had caused flooding and crop loss in low-lying areas.
Weather service MDA said that “heavy rainfall has favoured central Argentina over the past two weeks, with rainfall amounts of 4-8 inches reported across south eastern Cordoba, southern Santa Fe, Entre Rios, and far northern Buenos Aires.
“While the heavy rainfall ended dryness concerns in these areas, it also led to wetness and flooding concerns, which may lead to reduced soybean acreage, particularly in southern Santa Fe.”
More rain on its way
And MDA forecast further rain to come – although with precipitation likely proving heaviest further north, where wetness is less of an issue.
“While additional showers are expected across central Argentina late this weekend and early next week, the heaviest rainfall is expected to shift northward into northern Argentina and far southern Brazil over the next 10 days,” MDA’s Kyle Tapley said.
“This should allow wetness to slowly ease across central Argentina.”
Price impact
The downgrade by the Buenos Aires grains exchange to its soybean sowing estimate comes amid a growing focus on the issue in a market which witnessed Argentine weather worries spark a rally less than a year ago.
“After a dry start to planting, Argentina has now become a little too wet, and that is fresh in trade’s mind after April rains this past year support rally that took soybeans from $8.50 a bushel to $12 a bushels in just three short months,” said Kim Rugel at Benson Quinn Commodities.
Investors have got “back into adding weather risk premium to the market”.
However, estimates of area losses have varied widely, with the Rosario grains exchange saying that some 100,000 hectares of farmland had been put at risk by heavy rains, while respected crop scout Michael Cordonnier said that “in a worst case scenario… maybe as much as 1m hectares of soybeans in Argentina may not get planted”.
The Buenos Aires grains exchange kept at 4.90m hectares its forecast for Argentine corn sowings, saying that while rain had led to “waterlogging” in parts of provinces including Cordoba and Santa Fe, it had allowed plantings to resume in dry areas of Buenos Aires.
