South American crop forecasts are declining due to drought,but rain is expected soon

The drought caused by the La Niña phenomenon in Argentina and southern Brazil continues to reduce the potential of the soybean and corn crop, so the weather factor remains the main driver of price growth. However, in the near future, rain will fall in these regions, as well as in the winter wheat growing zone in the United States, which will somewhat reduce the pressure on quotes.

In the south of Brazil, heavy rains are expected within 7-10 days, which will favorably affect late soybean and corn crops. In the center and north of the country, dry weather will continue, which will allow harvesting soybeans and sowing Corn of the second crop, since soil moisture is quite high due to recent precipitation. On February 10, Conab lowered its forecast for soybean production from 140.5 to 125.4 million tons (134 million tons in the February USDA report), and corn production - only by 0.6 million tons to 112.3 million tons (USDA 114 million tons) due to an increase in the production of corn of the second crop in the country compared to last year by 42% to 86 million tons.

In Argentina, hot weather with uneven downpours will prevail for 7-10 days, but the amount of precipitation will not be enough to improve the condition of soybean and corn crops, so it will continue to worsen. Local experts believe that dry weather can lead to a "food catastrophe", as happened in 2018, if the amount of precipitation does not increase in the second half of February.

The Rosario exchange estimates the corn harvest in Argentina in 2021/22 MG at 48 million tons, the Buenos Aires exchange-at 51 million tons, the USDA – at 54 million tons. the soybean harvest in the country in 2021/22 MG Rosario exchange estimates at 40.5 million tons, the Buenos Aires exchange – at 42 million tons, the USDA-at 45 million tons.

In the Midwest of the United States and in the southwestern Plains next week there will be heavy rains and snowfalls, which will replenish moisture reserves on winter crops, while the air temperature will be higher than normal. The northwestern regions of the United States are still experiencing a drought, and precipitation levels there remain low.