Drought to drive more soybean production cuts

Early frosts could further complicate soybean and corn seasons

The climate continues its relentless attack on the 2022/23 farming season, and last week’s high temperatures complicated the state of soybean and corn even more. But that’s not all: frosts expected in the coming days could cause more production loss, which would make this season’s harvest one of the lowest in 15 years. Thus, a considerable drop in currency liquidation is also expected.

In its latest report on crop conditions, the Buenos Aires Grain Exchange stated: “In a context of insufficient moisture replenishment, above-average temperatures are harming the condition of the soybean crop. Although increased humidity was registered in some agricultural sectors, 67% of them are still reporting regular or dry water conditions, up by six points compared with last week. Meanwhile, after several days of high temperatures, 56% of the oilseed crop areas report a condition between fair and poor, surpassing the previous report’s figure by 8 points.” 

Thus, in just one week, the state of the crop deteriorated due to the high temperatures, predicting further production losses that may come hand in hand with early frosts forecast for the next few days, since the entry of a cold front is expected.

The areas most affected by the early frosts would be the Center of Buenos Aires Province, Southwest of Buenos Aires Province-South of La Pampa and Southeast of Buenos Aires Province. In these places, soy was already in a bad situation, and therefore there are expectations of total losses in the worst-affected lots.

At present, the Buenos Aires Grain Exchange predicts the soybean harvest will be 38 million tons, but when considering the current scenario everything indicates that it will soon make a new production cut, along the same lines as the expectations of the Rosario Stock Exchange, which is a harvest of just 34.5 million tons. In any case, the Buenos Aires entity has already stated that in the event of a series of early frosts and low temperatures, the foreign currency income from farming exports could be reduced by US$18.3 billion this year.

The corn situation is very similar to soybeans. To date, 3.8 million hectares present a regular or dry water condition –these represent 54.8% of the total planted area. On the other hand, there was a week-on-week increase of the fair/poor condition of 11.3 points, reaching 44.9% of the scenarios.

Regarding the province of Córdoba, the estimation is that 7 out of every 10 hectares of late corn are in a critical period, as they could be affected by the heatwave of the past few days. Finally, as with soybeans, temperatures below average are expected for the center and south of Buenos Aires Province, which could affect the current scenarios.

In parallel, and considering Argentina is the main exporter of soy flour, the country’s complicated farming campaign is providing support to prices in the international market. On Thursday, the oilseed managed to reverse its initial losses and end the round with a rise of between 0.2% and 0.6% per ton. The March contract traded at US$560.8, while May traded at US$558.96.

Originally published in Ambito.com / Translated by Agustín Mango


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