Dry weather in southernmost Brazil and Argentina isn’t likely to impact production expectations. But that could change, particularly in Argentina.
Heat levels are approaching triple digits in Argentina “so the evaporation rates are going to increase exponentially here,” says Matthew Kruse, an Iowa farmer who also farms in Brazil. In addition to farming in the U.S. and South America, Kruse is president of Commstock Investments.
With two decades of experience farming in Brazil, Kruse sees two elements that offset weather impacts at this point:
- Soybean farmers in central and northern Brazil are still showing strong yield opportunity.
- Farmers in Argentina and Rio Grande do Sul, the southernmost state in Brazil, came into this dry spell with good NDVI levels, Kruse says. As an indicator of soil moisture, the normalized difference vegetation index helps farmers understand crop resilience in the event of dry weather. Prolonged drought, however, could quickly change those conditions.
For farmers in southern Brazil and Argentina, Kruse says: “The question is: How long is this going last? Because it's already been probably a week, and forecasts show that another 10 days or so of dryness are on the horizon.”
If the forecast for rain around Jan. 20 holds, and weather continues to work with farmers in the rest of the country, Kruse believes overall production will stay on track.
That track is points to record soybean production in South America. “Cumulatively with Brazil, Argentina and Paraguay, they're looking at 231 million metric tons,” Kruse says. “That's about a 1½ billion bushels or about one-third of U.S. total soybean production.”
At those production levels, yield-impacting weather in Brazil can pressure prices. With current expectations, that pressure is downward.
Soybean planting intentions in the U.S. could add to that pressure. U.S. farmers indicated in a Farm Futures survey gathered in December that they plan to increase soybean acres.