NAPERVILLE, Illinois, Nov 2 (Reuters) - Just months after Brazil harvested its largest-ever corn and soybean crops, concerns are already brewing over the next crop as wild weather patterns are disrupting both northern and southern soybean-production areas.
As of a week ago, farmers in the top soy exporter had planted 40% of their 2023-24 crop, slower than a year ago. Leading state Mato Grosso’s soy planting reached 70% last week, falling slightly below the historic pace and reversing what had previously been a quicker clip.
Unusually hot and dry weather in Mato Grosso has caught traders’ attention. In the state’s crop-heavy north, October was the hottest in at least a quarter century and just about the driest since then, too. Farmers may have to replant soy fields, which could push back second corn planting.
In Brazil’s southern state of Parana, October rainfall totaled around 350 mm (13.8 inches), the most for any month in at least 25 years. Soy planting started on a quicker pace there, leaving some room for the rain delays. Planting was 69% complete as of earlier this week, slightly faster than normal.
Most industry analysts maintain strong hopes for Brazil’s soybeans. Consultancy StoneX this week placed the 2023-24 crop at 165 million metric tons, up from 154.6 million in 2022-23. The U.S. government projected Brazil’s new crop at 163 million tons last month.
El Nino, characterized by unusually warm surface waters in the equatorial Pacific Ocean, is currently in place and has mixed impacts on Brazil. Southern areas often observe high rainfall amounts, while center-west and northern regions may be drier and experience an earlier onset of dry season.
That contrasts with El Nino’s cool counterpart La Nina, which dominated for the last three years and wreaked havoc on crops in Argentina and southern Brazil, mainly through extended drought conditions.
PROBLEM OR NOT?
The diversity of Brazil’s soybean-growing region and the sheer volume of precipitation that some areas receive make it difficult to generalize El Nino's impact on yields. It is unhelpful in this analysis that there have not been many stronger El Ninos in recent years for comparison.
Not all El Ninos have led to dry soybean-growing seasons in Mato Grosso, but when September and October are abnormally dry, November and December often follow. That happened during the super El Nino of 2015-16, which resulted in Mato Grosso’s only truly bad soy harvest in the last couple of decades.
Soy yield was 13% below trend that year, but otherwise, soy yields rarely miss in Mato Grosso, making it difficult to detect an impending disaster.
Part of Mato Grosso’s success is that below-average rainfall can still be plenty. North Mato Grosso receives about 440 mm (17.3 inches) of rain on average in November and December, more than twice what Iowa could expect in July and August.
In the south, Parana’s rainiest soy-growing seasons have most often coincided with El Ninos, but actual yield outcomes are mixed. Dryness is Parana’s biggest enemy and yield swings can be huge, such as the 41% fall from trend in 2022, supported by La Nina.
Although October is only the start of the growing season, there is a slight tendency for lower soybean yields when Mato Grosso is dry and Parana is wet during the month. That bias somewhat washes out in November.
Forecasts suggest El Nino will certainly be around through Brazil’s soybean-growing season, possibly fading to neutral conditions by mid-year. But that could still impact Brazil’s second corn crop, which more often falls victim to El Nino’s wrath versus soybeans due to the suppression of seasonal rainfall.
In the near term, Parana may get a reprieve from the deluge into mid-November. Mato Grosso may pick up some helpful showers over the next week, though warmer temperatures should stick around. Karen Braun is a market analyst for Reuters. Views expressed above are her own.
(Editing by Rod Nickel)
