Crop weather trade discussion is almost entirely focused on chances for rain in Argentina's central crop belt ahead of mid-December. That's the southern hemisphere equivalent of mid-June, so these features are getting close scrutiny.
It has been dry in Argentina. Rainfall totals tracked by my colleague Joel Burgio show that, since Dec. 1, the average rainfall amount in the primary Argentina crop states has had these totals: Cordoba, 9.07 inches, 46% below normal; Santa Fe, 9.56 inches, 40% below normal; Entre Rios, 9.40 inches, just slightly above normal -- 4% above; Buenos Aires, 5.49 inches, 9% below normal; and La Pampa, 6.71 inches, also slightly above normal at 5% above normal.
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Crop health has suffered with this drier trend. Vegetation analysis by satellite derivation shows that, for the most recent time available, the end of November, the vegetation index was on average only in the northeastern and southwestern crop areas of Argentina. A large swath in the southeast, central, west, and northwest, had definitely lower-rated conditions versus average. Again, that departure from average is in large part due to the drier conditions.
How much potential production is at play is an important detail. A good back-of-the-envelope summary of Argentina's production in relation to other countries is that Argentina's soybean production is about half the Brazilian total. Trade guesstimates -- and I do mean guesstimates -- note that possibly 20% of the Argentina crop area could be at risk from drier conditions, with possibly up to 15% crop reduction. Start doing the math with percentages of percentages, and you come up with possibly a 3% drop in Argentina's soybean production. That is not a whole lot in the big picture. Using USDA's projection of 57 million metric tons for Argentina soybean harvest in 2017-18, a 3% drop equates to 1.71 mmt or about 63 million bushels, a bit under the estimated production of the state of Louisiana in the U.S.
That does not sound like a level of production to get worked up over. Nonetheless, with other grain supplies definitely large, and with soybean demand so strong, the potential weather stress issue right now is the dry pattern in Argentina.
Bryce Anderson can be reached at email@example.com
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