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January 9, 2012

South American Producers Wait for Critical Precipitation

Corn and soybean producers in Argentina and southern Brazil will keep a watchful eye on the sky this week looking for the much advertised rains that are forecasted for this week. After weeks and in some cases nearly two months of hot and dry weather, the rainfall is desperately needed to keep the crops from a total collapse.

In Argentina, the crop impacted the most has been the full-season corn crop, especially the corn that was planted in October or early November because it went through pre-pollination and pollination under severe moisture stress. How much of an impact depends on the crop's location and when the crop was planted. The corn least impacted by the weather might be the latest planted corn, but that will depending on the weather going forward.

The 2011/12 corn yields in Argentina are going to be highly variable just like the rains have been. The best corn in Argentina could still end up with an average yield, but the worst corn is going to be very bad indeed. In fact, there are reports of farmers in northwestern Buenos Aires cutting and baling the corn for cattle feed or letting the cattle graze on what little corn there may be in the field.

Additionally, there are still over 600,000 hectares of corn that have not been planted and the "drop-dead" for planting corn in Argentina is generally considered January 15th. For farmers who have not yet planted their corn, they will have to make a tough decision this week. If they get a good soaking rain, they may decide to go ahead and plant their corn. If they don't get a soaking rain, and if the forecast looks dry for the next week or two, I think many of them will decide not to plant corn, but instead put in additional acres of soybeans which are cheaper and less risky to grow compared to corn.

The soybeans in Argentina could still recover to produce an average type of crop if they receive good rains this week with one or two good follow-up rains within the next 7-10 days. If the soybeans receive only a moderate shower this week and limited follow-up showers, then the yield potential will continue to decline. There are still over two and a half million hectares of soybeans that have not been planted in Argentina. Most of these are double crop soybeans and they could be planted until the end of January, so the farmers still have some time to plant their remaining soybeans.

The area in Argentina where the precipitation is needed the most is in western Buenos Aires, southern Cordoba, and southern Santa Fe. On a map, it is where these three provinces meet. This is the core of corn and soybean production in Argentina and it is probably the most highly productive area of the country. Unfortunately for the farmers in Argentina, the driest soils are also some of the best soils in the country.

In southern Brazil it's also the corn that has been impacted more than the soybeans. The precipitation is needed the most in northern Rio Grande do Sul, western Santa Catarina, and western Parana where the full-season corn pollinated and entered the grain filling phase under severe moisture stress. In some areas, it has been nearly 50 days without a rain and as a result, a hundred or more municipalities in southern Brazil have declared a state of emergency. In many areas, streams, ponds, and wells have run dry and local authorities are truckling water to rural residents for human and livestock consumption.

The full-season corn yields in southern Brazil are going to be highly variable. In the eastern areas of the three above mentioned states, corn yields could still be average. In the dryer western areas, some of the corn will not be harvested at all due to nearly zero yields. Some initial corn harvesting has gotten underway in Rio Grande do Sul and Parana and the early corn yields are expected to be some of the lowest.

The soybeans in southern Brazil are also highly variable. The early maturing soybeans are expected to be hit the hardest because the crop has been filling pods under very adverse conditions. Some early soybean harvest has gotten underway in western Parana and yields are reported to be in the range of 17 to 35 bushels per acre.

The soybeans in Rio Grande do Sul are flowering and starting to set pods. Even though the soybeans are not yet in their critical reproductive stage, the development of the crop has been stunted by the lack of rainfall, and as a result, the yield potential has been negatively impacted as well. If they do receive good rainfall in southern Brazil later this week as forecasted, it will no doubt help the soybean crop, but it would be of little help for the full-season corn.