South America Calling
Alastair Stewart South America Correspondent

Tuesday 10/30/12

Weather Concerns Over South American Corn

With drought castigating the U.S. corn crop, the world is looking to South America to replenish stocks.

But a rocky start to the summer season raises doubts over the ability of farmers south of the Rio Grande to meet demand.

The outlook is most worrying in Argentina, where heavy rainstorms have soaked the farm belt since August, causing flooding and planting delays all round.

When the precipitation first arrived, it was welcomed, breaking as it did a long winter dry spell over the Pampas. But farmers watched with mounting dismay as rains equivalent to half or a whole year's quota fell across the key-producing regions in September and October, causing widespread flooding and waterlogging.

As a result, planting efforts are well behind schedule in Cordoba, Santa Fe, Entre Rios and Buenos Aires provinces.

According to the Buenos Aires Cereals Exchange, up until last Thursday, only 37% of the 8.4 million acres projected for 2012-13 had been planted, down from 55% at the same point last year.

The delays will force a number of farmers to plant corn out of the recommended window. That's terrible news, as yield potential drops dramatically the later corn is planted in November.

Meanwhile, with substantial areas currently under water, the area available for the grain will be reduced.

Local forecasters estimate planted area may drop by 15% on the rain.

The U.S. Department of Agriculture currently forecasts Argentina will produce 28 million metric tons (mmt) of corn. But with forecasts indicating little respite in the precipitation, local analysts are already talking about a crop of less than 24 mmt.

In contrast, the problem in Brazil is lack of rain.

The habitual heavy tropical summer showers have yet to fully break the winter drought in the central states of Minas Gerais and Goias, two key summer planting regions.

Instead, the states have received scattered showers, which helped some farmers but completely missed others.

As a result, planting is delayed and farmers are becoming a little concerned about dryness.

Overall, Brazil has planted 55% of a projected 12.4 million acres of summer corn to be grown in 2012-13, behind the 61% at the same point last season, says Safras e Mercado, a Brazil-based farm consultancy.

The irregular October rainfall is also hurting second-crop corn prospects in Mato Grosso.

The state doesn't plant much summer corn but has grown to become the main second-crop corn producer.

A lack of rain, especially in the west, has delayed the sowing of soybean, which in turn will limit the window for planting a second crop in February and March.

Getting the second-crop corn in the ground early is vital so that the corn can pass through key development phases before the dry season, which typically begins in April.

The elevated risk of planting second-crop corn late may cause farmers to reduce second-crop area this year, frustrating plans to expand.

The good news for Brazilian farmers is that cold fronts appear to be breaking down the hot air system over central Brazil and heavy showers are expected across Mato Grosso, Goias and Minas Gerais from Friday.

If, as forecasters indicate, this event ushers in the arrival of consistent summer showers, the Brazilian problems, at least will be minimized.

Brazil will produce 67.9 mmt of corn in 2012-13, down 6% on the year before, while exports will slide from 18.5 mmt to 11.9 mmt, according to Safras e Mercado.

This year, Brazil will usurp Argentina as No. 2 corn exporter, although those positions may be reversed again next season.


Posted at 11:39AM CDT 10/30/12 by Alastair Stewart
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