Oct 24 / Pedro Schicchi

Grains, Oilseeds and Livestock Weekly Report - 2023 10 24

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"Planting in Brazil is underway, reaching 29% completion with overall good progress, although there has been a slight slowdown attributed to dry weather, particularly in the Center-West region.
Argentina has also begun corn planting, but progress has been relatively slow due to delayed El Niño rains, prompting some farmers to consider planting soybeans or second-crop corn.
Soil moisture levels in key areas are below average in Brazil. However, since most crops are in the vegetative stage, and the critical reproductive phases occur later, this is not necessarily alarming.
While it's too early to claim it will have an impact on yields, the current dryness is a concern, with key crop development stages approaching in December and January in Brazil and in January and February in Argentina. The current weather patterns and soil conditions warrant close monitoring."

South American summer crop is starting. What are the early indicators?

An update on planting progress

Brazilian crop is starting, and planting this week has reached 29%. A slight slowdown in the last two weeks is noticeable. According to reports, this has been due to the dry weather, keeping farmers from maintaining the high pace seen in the first few weeks, particularly in the Center-West. Still, the pace has been pretty good so far, and levels are above the 5Y average.

Meanwhile, corn planting in Argentina has also started. The pace seen so far is relatively slow since the anticipated El Niño rains have not materialized yet. At least not in the needed volume and/or consistency. This is a factor that could push farmers to plant either soybeans or second-crop corn, to allow more time for the situation to improve.
Brazil Soybean – Planting (%)

Source: Safras

Argentina Corn – Planting (%)

Source: Bolsa de Cereales

Soil moisture levels, while not in a critical state, are less than ideal

The maps below show where soil moisture conditions in selected cutoff dates rank among more than 50 years of history. We have current conditions, one month ago and one year ago.

One month ago, most of the Brazilian Center-West had higher-than-average soil moisture levels. Currently, levels in most areas are below average. Exceptions are Rio Grande do Sol and parts of Paraná.

Before sounding alarmist, it is important to note that below-average does not necessarily mean bad. Additionally, most planted areas, including those of summer corn, are in vegetative development.

The maps below show where soil moisture conditions in selected cutoff dates rank among more than 50 years of history. We have current conditions, one month ago and one year ago.

One month ago, most of the Brazilian Center-West had higher-than-average soil moisture levels. Currently, levels in most areas are below average. Exceptions are Rio Grande do Sol and parts of Paraná.

Before sounding alarmist, it is important to note that below-average does not necessarily mean bad. Additionally, most planted areas, including those of summer corn, are in vegetative development.
Rootzone soil moisture – Oct-22 (percentile)

Source: hEDGEpoint, NASA

Rootzone soil moisture – Sep-22 (percentile)

Source: hEDGEpoint, NASA

Rootzone soil moisture – Oct-23 (percentile)

Source: hEDGEpoint, NASA

Short-term weather forecasts...

...show maintenance of the pattern that has predominated recently: rainier in the South of Brazil, but hotter and drier-than-normal in the Center North. When coupled with the current soil moisture levels, this is not exactly good news for the country.

In Argentina, close to average rainfall is forecasted, which is a more positive outlook – although not as widespread as one might expect during an active El Niño.

In any case, even if this is not determinant for yields at this point, things are not trending in a positive direction, and we must watch the next developments.
Precipitation Anomaly – Oct 24 to Nov 6 (in/day from normal)

Source: hEDGEpoint, NOAA

Temperature Anomaly – Oct 24 to Nov 6 (°F from normal)

Source: hEDGEpoint, NOAA

Conclusions

Once again, it is early to make claims about how this recent dryness will affect yield. In the past, soybeans have often resisted harsh starts and yielded a good crop in the end. However, the trend we are seeing is not too good, and this is a scenario that we must watch closely as it unfolds.

Looking at the usual development in these two countries, the key stages will happen in Dec/Jan in Brazil and Jan/Feb in Argentina. The base case scenario is still of good crops in both countries, but if we keep seeing the same patterns as we move closer to these key windows, concerns should grow.

Weekly Report — Grains and Oilseeds

Written by Pedro Schicchi
pedro.schicchi@hedgepointglobal.com
Reviewed by Lívea Coda
livea.coda@hedgepointglobal.com
www.hedgepointglobal.com

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