South America Calling

Driving through the northern and northwestern reaches of Argentina's Buenos Aires province over the last two days, I was struck by the contrast between the waterlogged low-lying fields and the dust coming up from bone-dry tracks alongside the higher-lying soybean crops.

There were also stark contrasts between crops, with the early-planted soy looking strong and lush, while the later-planted fields looked in desperate need of moisture.

This is the product of the bizarre weather patterns experienced across Argentina's grain belt this year, with a year's worth of precipitation falling between August and mid-December and almost no rain since.

"It has been a strange year. We have had all the right elements, moisture and sun, but at the wrong time," said Roland Graham, a farm consultant in General Villegas, northwestern Buenos Aires.

The north and northwest of the province got under an inch of rain in January, when the average is around 6 inches, and as such the crops are in desperate need of rain as they hit flowering and pod filling.

"The soybean crops planted in October are faring well as they have managed to effectively draw from the water table below. But soybeans planted in late November and December are suffering," said Carlos Popik, who farms 3,700 acres in 9 de Julio, northern Buenos Aires.

The problem is that a larger-than-normal percentage of the crop was planted late because of the torrential downpours in October and November. Around 40% to 50% of local soybean crops were planted after mid-November.

"If it rains in early February, my early-planted beans will do very well and my later beans will do OK. It needs to rain right now though," said Popik, a retired head of Monsanto's operations in Latin America.

A similar situation is encountered in General Villegas, around 120 miles further northwest, but with the difference that while Januarys are normal dry in 9 de Julio, Februarys can be dry there.

Earlier this week, forecasts showed some rain for Buenos Aires province around next weekend, but the latest charts show reduced chances. Farmers are hoping that forecass for rain the week after are more accurate.

"The soy can't just live on soil moisture. They need rain soon," said Lee Trimmer, a Missouri-born farmer who plants 8,600 acres around General Villegas.

Production has already taken a hit because a sizable number of fields were planted late, or not at all, due to flooding.

It is common to see fields in the region that have bare spots where standing water made it impossible to plant.

"Yield potential is already reduced because we planted late. We have to wait to see how much dry weather affects the crop," said Trimmer.

In truth, these regions are looking fairly good compared with parts of Cordoba, the biggest soy province, and Santa Fe. In these northern areas, dryness is reportedly really taking a much greater toll on the soybean crop. The corn crop, in contrast, is looking good with early-planted fields already through the drought danger zone.

What is the impact of drought on the Argentine crop as a whole? It's difficult to tell as the situation is very fluid.

But Carlos Popik isn't afraid to go out on a limb.

"If you are predicting over 50 million (metric) tons (for Argentine soybeans), you need to take 10% off your number," he said, following a trip through southern Cordoba and Santa Fe this week.

 The situation is less threatneing for the corn crop.

With most of the early corn planted in August, September and October, the majority of the crop had already passed the tassling stage before the dry January. 

Indeed, the wet conditions followed by the sun means that a lot of the early corn looks magnificent.

Meanwhile, the later corn has yet to reach tassling and so rain in September would lead to an overall excellent crop.

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