South American Weather Update

Published on: 09:10AM Jan 25, 2011

There is a great piece of information circulating that calculates an index known as the "Normalized Difference Vegetative Index" or "NDVI".  This weather tool uses the chlorophyll response seen in satellites to determine generally crop moisture levels.  Then some math wizards use the information and apply it to historical yield numbers to give a better indication of what we may see coming down the pipe.  As of right now, and from what I could gather the "NDVI" is showing poor readings in many parts of Argentina's main belt.  To be specific there are many sections in Buenos Aires, Cor-doba, and Santa Fe that are very poor.  In Brazil the "NDVI" points out problem areas to be in the western part of Rio Grande do Sul and select southern areas of Mato Grosso do Sul.  If you apply this information to the most recent long term weather forecast for Brazil, I personally don't see many problems ahead.  The forecast are calling for more rain through January particularly in the western and southern areas, and specifically some of the drier areas of Mato Grosso do Sul and Rio Grande do Sul.  You would have to believe these rains would certainly help their overall yields.  In my opinion Argentina has a few more concerns.  Yes, recent rains have certainly helped their situation, but from what I hear there are still some significantly dry areas particularly in South central Santa Fe, and Central and Southern Cordoba. Recently though, forecasters have penciled in a round of rain for these areas as well.  You know how I feel about betting on the weather or should I say the weather forecasters.  If the rains come as anticipated it looks like both Brazil and Argentina could escape this crop year in descent condition (for beans).  For now this is the news and information the trade will have to play off of.  If I were forced to guess, I would have to imagine a monkey-wrench will get thrown into the mix at some point.  We will either see too much rain at harvest (the same thing that happened to Australia), or the rain may simply never come at all.

Make sure you are signed up to receive my FREE Daily updates.  The information will be sent directly to your e-mail each morning at NO Cost and NO Obligation.  Every e-mail is jammed packed with great information, commentary and strategy direct from the trading floor.

Click the link below to subscribe. 

Free Farm Direction Report