Soybean and corn markets remain affected by volatile weather in South America

Challenging weather conditions in major soybean and corn producing and exporting countries Brazil and Argentina are supporting markets, while wheat prices are falling amid heavy rains in the US wheat-growing regions.

Traders' attention is focused on Argentina, where dry and hot weather prevails. Some rain this week has failed to improve crop conditions, especially given the high temperatures. A new heat wave with little precipitation is expected in the first half of March, so analysts continue to lower production forecasts.

Most regions of Brazil will see brief rains next week, except for the state of Minas Gerais, where rainfall will be less. Despite prolonged rain during the week, it was possible to speed up soybean harvesting and corn planting, so analysts improved their crop forecasts. Although there is a risk of a decrease in the yield potential of corn crops sown after the optimal dates, since their flowering period will fall during the May drought season.

The Agroconsult agency, as well as the representative of the USDA in Brazil, confirm their forecast of soybean production at the level of 153 million tons, and corn at the level of 128.5 million tons, which will exceed last year's figure by 8.6%.

StoneX experts raised their soybean crop forecast in Brazil by 454,000 tons to 154.7 million tons, as drought-induced crop losses in the state of Rio Grande do Sul were offset by strong yields in other states. StoneX raised its corn crop forecast by 7.1 million tons to a record 130.6 million tons, while the USDA estimates it at 125 million tons.

The U.S. Midwest saw heavy rain and some heavy snow storms this week, but not much, especially in the drought-stricken Southwest. Such weather will continue for a few more days, which will allow to replenish the moisture reserves of winter crops and facilitate the start of spring wheat sowing.

According to Graincorp estimates, Australia will harvest approximately 25-26 million tonnes of wheat in FY 2023/24 after three years of record production of 35 million tonnes. The El Niño phenomenon in the second half of the season will bring dry weather, so it is important that in April-June, when wheat is sown in the country, sufficient rainfall has fallen.