Will This Be The Rain Event That Pans Out For Argentina?

* Will this be the rain event that finally delivers? Argentine crops have been suffering amid heat and dryness for over a month after a very soggy start to the growing season. While there have been multiple rain events over the past couple weeks, they’ve all turned out of disappointing. As a result, some are questioning whether the forecast calling for rains late this week and early next week will finally live up to expectations and provide some significant relief. Currently, forecast models suggest rains of 1 to 2 inches and coverage of two-thirds to three-quarters of central and eastern Argentina Feb. 11-12. The long and short of it: While private Argentine crop estimates continue to decline, rain in the forecast is price-negative. Key to price action will be how the forecast develops as the rain event draws nearer. * Argentine soy crop lowered again. Pro Farmer South American crop consultant Dr. Michael Cordonnier lopped another 1 MMT off his Argentine soybean crop estimate, lowering it to 51 MMT. He is especially concerned with the later planted acres, which are struggling more than earlier planted soybeans amid the heat and dryness. The later planted acres are basically double-crop soybeans and therefore, late-season weather is critical to yield potential. That’s why the forecast rain event for central and eastern Argentina is so critical. If the rains develop, it could be enough to stop the slide in production estimates, but if this rain event is again disappointing, further cuts to the Argentine crop are likely. The long and short of it: Rains in the forecast are price-negative for soybean futures, but until Argentine crop estimates stop declining, the downside is limited. * Update on Russia’s lifting of grain import duty. As I reported yesterday, Russian officials decided to lift the 5% duty on grain imports until mid-summer, as widely anticipated. Because Russia must clear such move with Kazakhstan and Belarus, with which it has a tariff-free trade agreement, it’s expected to take until early April before Russia can import grain free of duties. Also yesterday, Brazil said it will exempt 1 MMT of wheat from outside of the Mercosur trade block (Argentina, Brazil, Paraguay, Uruguay, Venezuela and Bolivia) from import duties between April and July. The long and short of it: As I said yesterday, the Russia’s lifting of its grain import duty won’t likely have a direct impact on demand for U.S. wheat, but there is likely to be an indirect impact. Brazil, however, could source a good portion of its duty-free wheat imports from the United States.