Argentina's farmers are getting nervous ahead of expected dry weather over the next two months due to the La Nina weather phenomenon, but steady rainfall during the run-up to planting has given the crops a good start.
La Nina involves a cooling of ocean temperatures off the Pacific coast of South America and generally brings dry weather to the south and showers to the north of the continent. While the effects in Argentina have come a couple of months later than usual, this season's La Nina "is one of the most intense in recent decades," Buenos Aires Cereals Exchange climatologist Eduardo Sierra wrote in a report Wednesday.
The dry weather helped lift international grain prices in recent weeks as traders speculated that Argentina may fall short of the record crops initially expected, in addition to concerns over conditions in the south of Brazil.
Argentina is no. 2 in the world in terms of corn exports, no. 3 in soybean exports and is the leader in soymeal and soyoil exports.
Argentina's Agriculture Ministry expects total 2010-11 grain production to top 103 million metric tons, up sharply from the previous record of 93 million tons a year earlier.
The government is expecting 52 million metric tons of soybeans, Argentina's top crop, close to last year's record. The ministry sees corn production hitting a record 26 million tons, up sharply from the 22.5 million tons grown last year, according to the U.S. Department of Agriculture.
But according to the exchange, La Nina will be in full force in the key growing month of December, bringing lower-than-average rainfall levels. With only half of soybean planting done and delays due to recent dryness, that is sparking concern. Many farmers may have to shift to late-season soy, which generally produces lower yields. Corn planting is about three-quarters done and the seeded crops are entering periods when showers are needed.
Still, the excellent spring conditions are fueling hopes that the crops will get through the summer heat without too many problems.
"Conditions are good in the main corn belt (and high) international prices are helping a lot" to spur farmers to keep planting, said Johnny Avellaneda, founder of the corn chamber Maizar.
Miguel Calvo, the president of the soy chamber Acsoja agreed. "In general, soil moisture levels are good, although it's hard to predict how the crop will turn out," he said.
Even more optimistic is David Hughes, the president of the wheat chamber ArgenTrigo. The wheat harvest is in full swing and production prospects are set. The total crop is likely to come in at 12 million to 13 million tons, Hughes said. That's up from under 10 million tons last season.
But markets will continue to keep a sharp eye on the corn and soy crops. Below-average rainfall is expected to continue through January, while February will see the gradual, if erratic, return to normal moisture patterns, according to the exchange.
While this season's crops are expected to hold up relatively well, there are signs that La Nina may extend through most of 2011, which could be a serious problem next season as farmers face parched soils come planting time. That could bring a repeat of the 2007-08 season, when drought parched crops and caused output to plunge, according to the exchange.
