Update on South American soybean crops

November is the most important month for soybean planting progress in South America’s two largest producers, Argentina and Brazil. The Brazilian government does not release planting progress updates. Instead, that task is left to private industry. Monday morning the Brazilian analytical firm Celeres estimated soybean plantings had reached 37% complete. That is up from 27% last week but off from last year at 48%.

Argentine farmers continue to struggle with excessive soil moisture across most of the primary soybean region. The Buenos Aires Bolsa reports that plantings are off to an inauspicious start at only 3.6% planted in the report dated on November 1. That is off from 10% for November 1, 2011, and it is down from our long-term average calculation at 12%. Progress advanced by only 1.6% for the week. In a normal season progress would reach toward 25% complete by November 8. We would anticipate progress perhaps reaching toward 10% complete instead.

Soybean markets are under pressure with traders selling beans on optimism that weather patterns are shifting to more favorable conditions for plantings. The long-range maps for over one week have projected drier conditions for Argentina and wetter conditions for Brazil in major growing regions.  Agronomists would find both developments favorable for production prospects.

click image to zoom Setbacks suffered by Argentine farmers in producing up to potential for soybeans have been a major factor behind two rallies in global soybean prices over the past four years and contributed to soybean bullishness in a third year. Drought decimated the crop harvested in 2009 while the harvest earlier in 2012 suffered large deviation from potential. The harvest in 2011 fell short of earlier expectations, which in turn made the U.S. production shortfall later that summer worse in terms of its impact on global supplies. The U.S. is the source for those global consumers needing soybeans or soybean meal until the next South American harvest. High soybean prices serve two principal purposes. One is to ration those available supplies until the next global supply relief out of South America. The other is to encourage large production in South America.

The preceding chart displays the early soybean planting progress in Argentina as provided by the Buenos Aires Bolsa. We have gathered up historical planting progress reports from this source back to 2004 in order to construct a crop progress chart similar to that in our weekly Crop/Weather Update chartbook for the U.S. during the growing season here. Plantings are off to a slow start at only 3.6% planted in the report dated on November 1.

click image to zoom The topsoil moisture chart is provided to us by our weather consulting firm, World Weather, Inc. This is their latest analysis with data through earlier this week. The map is focused on the Argentine crop regions. The heaviest concentration of soybean production is located where the map is shaded to show extremely wet conditions. That is the border region between Cordoba, Santa Fe, Entre Rios, and Buenos Aires provinces.

Weather forecast maps throughout this week have been encouraging the view that there will be some relief from the very wet conditions over the next week or so. But beyond that there are many question marks. It is possible that some break from the rains would allow for modest progress in areas about the periphery of the most severely wet regions. Many Argentine farmers just like their counterparts in the U.S. in May are also trying to plant corn, which is also delayed. An improving weather trend may encourage corn plantings first rather than soybeans. With extremely tight world soybean supplies, weather conditions in South America will continue to be the main factor affecting soybean prices.

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