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Welcome to the Southern View blog featuring fresh information about grains and cotton production in Brazil, along with information about Argentina's and Paraguay's crops.

Weather Causing Big Problems in Argentina

Dec 28, 2010

The market is very worried about Argentina’s weather. And it’s right! In the last 30 days rain was about 25% and 65% below normal, and 50% below for last 60 days. Forecasts for next week indicates warm and dry days. As only about 75% of soybean area is so far planted, it’s expected that many growing area will be left behind, and also yield is seriously under risk.

Local agencies are estimating the total soybean production in AR under 50mmt. Corn is also under risk: 50% pollinated (is this it?!) so other half will happens under this dry climate.
 
In Brazil also some worries about weather: Too Dry around NW and Rio Grande do Sul (S) regions, and excess rain in Mato Grosso (CW). So far it doesn’t indicates down on productions, but put market in alert for the next month. As soybean planting has finished in 90% of regions, the moisture in soil is enough to support it. But January must to rains.
 
CBOT prices are very appreciated, even with strong Real. Internal Basis is weak as per last weeks, but historically high considering prices in CBOT. So final price is good now, but most of producers waiting for a better moment to sell more soybeans.
 
It’s also important consider chicks, pork, beef… all kind of meat is very expensive in Brazil. Beef price increased 11,5% only in November, and this year many slaughters closed doors due to lack of cattle. And stimulated demand keeps making barbecue (Churrasco, as we say here). This situation gives margin for feeding grains prices keep increasing locally.  
 
The question in the market here is: how strong R$ will go with new government? And, what’s CBOT price limit to make demand blows up?!
 

 

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