The rains in Spain fall mainly on the plain, but this year, good rain in Brazil in may just bring you pain. But before you lose your holiday cheer, skip down to the last sentence of this blog entry.
After all, a series of good things seems to be moving in the Brazilians’ direction so far, crimping Chicago prices on the last Monday before the big day. I don’t usually write much about the markets because there are plenty of guys at Farm Futures better than me at that. So let’s focus mostly on the big picture.
The knock-on effects of good rains
Among reasons why: a noted ag observer told a reporter he figured some 97% of the 2016-17 Brazilian bean crop was in the ground, which would make this season the second-fastest pace on record. It’s easily ahead of the same time as last season, and behind only the mark sent at this time of 2014. Given that it’s so important for Brazilian farmers to get their second-crop corn in by mid-February or better, the good rains that helped get planting so far along so fast promise to help yields.
That, according to consultant Flávio França, quoted in respected ag magazine Globo Rural, means that rain-propelled faster planting also means more soybean acres and more production. França is calling for 83.78 million acres this season, with production up to 105 million tonnes this time around. That’s an 8% production increase from a rather disappointing 2015-16 — a disappointment brought about chiefly by short rainfall in an El Nino year.
Argentine producers were getting into the spirit of joy, too
Buenos Aires is not just the name of that town where they do the tango. It’s also the capital of the most important Argentine soybean-producing province. And farmers there joined the Brazilians this week in getting good news as Christmas approached. The gift: a generous 1.9 inch of rain to help them come off some of the dry weather that’s delayed some planting progress. Other Argentine soybean-producing provinces are slated for up to three inches of precipitation by Christmas Eve.
But where’s your gift?
You probably could us something in soybeans to get happy about, too, this week. And like I promised, here it is: Aside from Chinese demand likely continuing to keep beans from sliding too much, you can keep in mind that with rain in Brazil comes, alas, rust. Since South American farmers are dancing due to the reasonable rains they’ve just gotten, you know it’s been pretty dry.
In Brazil more than Argentina, the amount and vigor of rust tend to correlate with precipitation levels, and more rain is on the way in South America. It isn’t much in the way of a glimmer of hope for stronger prices, but it’s at least something! Merry Christmas!
The opinions of the author are not necessarily those of Farm Futures or Penton Agriculture.