Fall weather has been beautiful around most of farm country, allowing corn and soybean harvest to roll on with barely a hitch. As U.S. producers prepare for winter, many are turning their attention to weather in South America, where planting is underway.
Although many weather experts this spring predicted La Niña would arrive earlier in 2016 and match the strength of El Niño in 2015, those conditions didn’t materialize. Now, cooling ocean temperatures and other factors point to La Niña fully developing late this year or early next year. That’s good news for U.S. producers but not for South American producers, who will be in the middle of the growing season, says Brad Rippey, USDA meteorologist.
La Niña can create a “higher potential for drought affecting Argentina’s corn and soybean production” as well as production in southern Brazil, says Mark Brusberg, South American meteorologist for USDA.
Weather challenges in the Southern Hemisphere could send U.S. soybean prices higher, says DuWayne Bosse, a producer and market analyst with Bolt Marketing.
“In soybeans, you almost need a record crop every six months, one from us and one from South America,” Bosse says. “If you get anything less than that, prices tend to spike.”
It wouldn’t take much for a weather market to take hold and rally futures, Bosse adds. Parts of Brazil already looked dry as of mid-October and were dry in 2015, too. Yet Brazil is hard to monitor, Brusberg cautions. Although there are definite weather effects to watch including dryness, he says, there hasn’t been a noticeable difference in yields from one year to the next. He credits shifts in cropping patterns, changes in varieties and alternate planting dates.
For now, planting conditions in Brazil and Argentina look great right, Bosse says. Yet Brusberg warns that in the past, La Niña problems haven’t begun until December. “Usually, a heat wave develops in the latter half of December,” he says. “This doesn’t happen every year, but I’ve certainly noticed it some years.”
La Nada Alternative. There’s always a chance La Niña won’t develop. False starts aren’t unusual. Commodity markets could dip, Bosse says, if climate conditions move toward a more neutral position and if South America enjoys a bountiful harvest. “I think we’ve got a premium built into the market for South America to have a weather problem,” he says. “That’s something I’ve never said before.” Yet ending stocks and carryover relative to soybean prices suggest the market sees few production issues ahead.
U.S. Drought Next Year? The term “La Niña” evokes images of drought, but the reality is more complex, says Brad Rippey, USDA meteorologist for North America. Typically, La Niña lasts through just one cold season in the Northern Hemisphere, limiting the extent of any dryness. If it does materialize, it could be gone shortly after planters roll. Yet that’s not always the case because it’s difficult to forecast U.S. weather for the warm season after La Niña develops, Rippey says. If La Niña persists into the growing season, drought-like conditions can emerge. “There is a very slight tilt in the odds for drought coverage in the U.S. the stronger La Niña gets and the more persistent it is,” he says. Still, producers can breathe easier simply by pulling out a map: The U.S. is huge, so depending on the jet stream, farmers in the west could experience severe drought while those in the Corn Belt could have a perfectly normal growing season.