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January 10, 2017

Argentine Farmers confront Floods and Drought, Soy Impacted

The weather in Argentina continues to be very erratic. While farmers in the core production regions of the country are struggling with heavy rains, flooding, hail and severe storms, the farmers and ranchers in the southern production areas are facing a prolonged drought and high temperatures that have resulted in wild fires.

The areas where the heavy rains have fallen since Christmas encompass some of the most productive regions of the country including the provinces of: Cordoba, Santa Fe, northern Buenos Aires, and Entre Rios. The crops in this area are mainly soybeans, corn, wheat, hay and pasture. Rainfall data from 43 municipalities in Argentina for the two week period from December 21st to January 3rd indicate that 8 municipalities received between 14 and 15.6 inches of rain, 8 received 12 to 14 inches, 8 received 10 to 12 inches, and 18 received 8 to 12 inches.

In their weekly report last week, the Buenos Aires Grain Exchange reported that the soybean planting in Argentina was 92.9% complete which leaves an estimated 1.3 million hectares left to plant. Approximately 71% of the soybeans left to plant are in northern Argentina, 8% are in the core production region, and 21% are in southern Argentina. The soybean acreage left to plant does not include any soybeans that may need to be replanted due to the flooding or saturated conditions.

The Buenos Aires Grain Exchange lowered their soybean acreage by 300,000 hectares in the weekly report last week. They are now estimating the 2016/17 Argentine soybean acreage at 19.3 million hectares. The reduction was due to drought in southern Buenos Aires that delayed the planting of the double crop soybeans until the planting window had already closed. The reduction did not include any soybeans that may be abandoned due to flooding or saturated conditions.

In the core production areas, the saturated and flooded conditions are impacting the later planted full-season soybeans, the double crop soybeans, and the second phase of the corn planting. The recently planted crops in the flooded fields will be a complete loss and those fields will need to be replanted if it dries out in time to replant. The earlier planted corn is past pollination and into filling the grain, so the earlier planted corn will not be impacted as much as the soybeans or the later planted corn.

Certainly there will be soybean acreage lost due to the flooding and the extent of the losses will depend on the weather over the next two weeks. If the saturated areas of central Argentina remain dry for the next two weeks, some of the flooded soybeans could be replanted. If the saturated areas receive more rain over the next two weeks, a lot of the drowned out soybeans will not be replanted because the planting window will have already closed. The planting window for soybeans in central Argentina generally closes by January 10th, but it could be extended for an additional ten days or so under special circumstances such as what is occurring this year.

Therefore, it is possible that an additional 300,000 hectares or more of soybeans could be lost due to the flooding and saturated conditions. Combining the loses from flooding and drought, the 2016/17 Argentine soybean acreage could decline as much as 600,000 hectares or more from initial estimates or approximately 3%.

In contrast to the saturated conditions in central Argentina, southern areas of Argentina continue to suffer from a prolonged drought. The drought area is mainly in southern Buenos Aires, southern La Pampa, Rio Negro, and Neuquen. In southern Buenos Aires, the main crops are soybeans, wheat, and corn. In southern La Pampa and Rio Negro, there are not many row crops planted with most of the area in pastures.

As a result of the dryness, the soybean planting has basically been suspended in southern Buenos Aires while farmers wait for enough moisture to insure germination and stand establishment. The crop impacted the most in southern Buenos Aires are the double crop soybeans.

In southwestern Buenos Aires, southern La Pampa, and Rio Negro, the drought is even more extensive. It is estimated that as much as 800,000 hectares may have been impacted by wild fires in the region. Most of the area consumed by the fires were dry pastures and scrub land. There is only a limited amount of row crop production in the region.