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July 22, 2016

Onset of La Nina could pose Problems for Brazilian Farmers

Farmers in South America are watching the development of La Nina with trepidation. Much of the media's attention has been directed to the U.S. and if La Nina is behind the extreme temperatures being recorded in the central United States. Many locations in the United States are experiencing the hottest temperatures in four years. It's hard to say if the high temperatures are the result of La Nina or not, but the developing La Nina will have an impact on the weather in South America as farmers prepare for the 2016/17 growing season.

According to analysts conducted by the Climatempo meteorological group in Brazil, La Nina will be in place by October and it should persist through 2017. Meteorologists for Climatempo expect La Nina to result in dryer than normal weather in southern and southeastern Brazil during the period from September to December, which is the main planting season for the majority of crops in Brazil, especially soybeans. The potential impact should not be as great for corn because only one-third of Brazil's corn is planted between September and December. Two-thirds of Brazil's corn crop will be planted next January and February as a second crop following soybeans.

The temperatures in southern Brazil during September to December is expected to be normal or slightly hotter than normal, which would be better than the last two years when temperatures were significantly hotter than normal.

Farmers in Brazil are allowed to start planting their soybeans starting on September 15th, and any delay in getting the 2016/17 soybean crop planted could have a big impact on domestic soybean prices. The carryover supplies of soybeans in Brazil are going to be so razor thin, such that a 20-30 day delay in getting the crop planted could put significant upward pressures on prices.

Any delays in getting the soybeans planted would also delay the planting of the safrinha corn crop as well. Meteorologists from Climatempo are not predicting any adverse weather for the safrinha corn crop resulting from La Nina, but if the corn is planted later than normal, it greatly increases the risk of below trend line yields.

The Brazilian meteorologists are expecting La Nina to result in greater than normal rainfall in northern and northeastern Brazil accompanied by slightly hotter than normal temperatures. If that forecast verifies for northeastern Brazil, it would certainly be much better than this past growing season when the region suffered significantly lower crop yields due to very hot and dry conditions.