Argentine farm weather has lurched from one extreme to another over the past year.
Last summer, one of the severest droughts in living memory ravaged soybean and corn crops. But this summer, it is record rainfall that's inhibiting planting and threatening to reduce output.
The deluges started in September and continued through October, flooding and waterlogging large areas of Buenos Aires and La Pampa provinces.
The Buenos Aires government estimates around 10 million acres have been waterlogged. However, the Buenos Aires and La Pampa Rural Confederation (CARBAP), argues the true figure is 33 million acres, or about 45% of the state.
Obviously, there is a lot of politicking involved in estimating the flood impact on Argentina's biggest farm province and the CARBAP number may be overinflated.
But the rain and subsequent waterlogging certainly is a problem.
It has caused soybean planting to fall weeks behind schedule.
As of Thursday, Argentine farmers had planted 10.8% of the projected 48.7 million acresforecast for this season, sharply back from 25% last year, according to the Buenos Aires Cereals Exchange.
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It has also delayed corn planting, which lags 14 percentage points behind last year at 44.2% complete, says the exchange.
"But how badly will this affect crop size?" I hear you ask.
Well. That's a very difficult question to answer.
The areas worst affected aren't in prime soybean and corn regions, while, conversely, the grain acres that are waterlogged tend to be in the top-producing regions with excellent drainage.
A couple of weeks of dry weather would put the soybean and corn crops firmly back on track, analysts say
But that simply doesn't look like happening at the moment.
The grain belt has enjoyed a rare dry week so far, but that run will be broken by a cold front that is currently sitting over southern Buenos Aires province and will deposit moderate to heavy showers over western and northern Buenos Aires and Santa Fe provinces on Friday and Saturday, according to the Argentina Meteorological Service (SMN).
And SMN's long-term forecast also paints a discouraging picture with above-average rainfall expected for November, December and January.
If this prediction pans out, it means less soybean and corn acreage.
"It is very likely that, if above average rainfall continues in the coming months, many acres won't recover adequately to be planted," said the Buenos Aires Cereal Exchange in a weekly report released Thursday.
It isn’t just water sitting in the fields that will restrict planting, but also flooding that restricts access to more remote fields.
The situation is much more critical for soybeans than it is for corn, according to Pablo Adreani of the Agripac grains consultancy.
That's because the soybean-planting window closes in early December and yield potential falls dramatically as November passes, he explained. For corn, the main planting window is now closing, but farmers can take advantage of a second window in December and January.
Earlier this week, Hamburg-based consultancy Oil World said Argentina soybean production could be 3 to 6 million metric tons (mmt) lower than its earlier estimate of 55 to 56 mmt because of the rain disruption to planting.
Meanwhile, on Wednesday, the Argentine Corn Industry Association (MAIZAR) said weather would trim 1 to 2 mmt from the corn crop, which it now pegs at 26 to 27 mmt. Talking about losses a month into the season is never good news, but it mustn't be forgotten that this estimate is still well above the 24.5 mmt previously forecast by the Argentine government and represents a record crop.
It's a fluid situation that very much depends on how much soy and corn farmers can plant in the next couple of weeks, and under what conditions.
Certainly, market players will be keeping a close eye on events as Argentina and Brazil were expected to replenish soybean and corn stocks depleted by droughts in the U.S. and South America earlier in the year.
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