April 28, 2016
Flooding Causes Extensive Damage to Argentine Soybean Crop
More rain fell last week and then again over last weekend in the already flooded and soggy fields of Santa Fe, Entre Rios, Corrientes, and Chaco in eastern and northern Argentina. In some of the hardest hit areas, it was estimated that as much as 60% of the farmland was under water. In a satellite study conducted last weekend, it was estimated that over 7 million hectares of farmland in Argentina was flooded.
Urban areas were also hard hit due to the flooding along the Parana River, the Uruguay River, and the Paraguay River. Thousands of families along the rivers have been forced from their homes and more rain fell across the region last week and over the weekend. In this region of Argentina there is almost no slop to the land, so flood waters recede very slowly.
Many farmers in the area have pasture and hay in addition to row crops, which makes it difficult to determine how many hectares of soybeans have been lost. In the flooded areas, the concern is that some soybean fields will be a complete loss once the flood waters recede and other fields will have very poor quality seed that is sprouted, moldy, or rotted. Accurate estimates of the number of hectares of soybeans and corn that have been flooded are difficult to determine due to many areas still being inaccessible and the ongoing nature of the wet weather.
The soybean harvest in Argentina has basically been paralyzed for three weeks due to the wet weather. Late last week, the Buenos Aires Grain Exchange estimates the soybean harvest at 16% compared to 46% harvested last year. The soybean harvest only advanced approximately 1% last week and this marks the slowest soybean harvest in Argentina in at least a decade. The weather this week has been cold and dryer, so the harvest pace should pick up as the week progresses. An additional problem could be the cold temperatures and the possibility of the first frosts of the season, which could impact the later developing soybeans.
The 2015/16 Argentine soybean estimate was lowered 2.0 million tons this week to 57.0 million and I have a lower bias going forward. It is very difficult to estimate these sort of loses because the acreage and yield losses can't be completely known until all the crop is harvested. The Argentine soybean estimate could move lower if wet weather returns or freezing temperatures impact the later developing soybeans. I put the minimum for the Argentine soybean crop at 54.0 million tons, but there are some private estimates as low as 52-54 million tons.
In their weekly report last week, the Buenos Aires Grain Exchange lowered their estimate of the Argentine soybean crop 4 million tons from 60.0 million tons to 56 million tons. If verified, that would put the crop 7.9% below last year's 60.8 million ton production. In the flooded areas, they cited lost acreage and lost yields as the reason for the decline. In the hardest hit areas, many fields will be completely lost while others will suffer losses in the range of 15% to 30%. The Ministry of Agriculture in Argentina also reduced their estimate of the nation's soybean crop. They reduced their estimate by 3.3 million tons from 60.9 million to 57.6 million.
Outside of the flooded areas, the soybean yields continue to be very good with the potential for record yields in Buenos Aires, La Pampa, and Cordoba. The harvest in these areas has also been slowed by wet weather, but they have not experienced the flooding or even sustained saturated conditions. The high yields in regions where there was no flooding, will only partially compensate for the losses due to the flooding.