Bumper crops expected
Month Day, Year
by Drew Lerner
Weather patterns during the Northern Hemisphere summer season this year were broadly tame relative to the highly volatile years from 2005 through 2012. The trend seems to be moving away from those volatile years and more toward the kind of crop growing weather that producers and traders came to know in 1990s and early 2000s. Production from around the world this year is anticipated to be favorable and many grain and oilseed bins will be running full.
Talk about increased plantings in South America has sent a chill up the spines of some agricultural traders and producers because a big increase in production might just result in a notable surplus of grain and oilseed stocks ending any perceived hope that prices will once again rise with meaning. The situation might be great for food companies looking for a significant year of relief after recent high prices, but not everyone will benefit the same. Producers could be faced with a significant decline in income during the balance of 2014 and 2015 if the production glut continues.
Weather conditions have not been as adverse as they have been in the past. U.S. crop yields are huge and despite the futures markets trying desperately to find a problem with production this year, there has been very little. Many weather forecasters still got it wrong in the spring of 2014 that El Niño was coming and that it was going to be a “super El Niño” event with calamitous weather in many areas. There was very little calamity and as of today we still do not have an official El Niño. So where do we go from here?
South America is not going to provide much respite from falling futures prices. In fact, the talk from Brazil is that more new land will be brought into production this year and the nation will continue to produce two corn crops with increased canola production and a boost in second season soybean production. All of this conversation is occurring while world weather is taking a break from the volatility of recent years and raising the potential for good yields in Brazil and fair to good production in Argentina as well.
World Weather, Inc. anticipates a good start to the growing season in Brazil and Argentina. Planting will begin soon starting with an early corn crop in Brazil and following it with early soybean planting in late September. Weather conditions in September are poised to generate a well-timed rainfall pattern that will begin soon and continue with great rhythm through the month and into early October. The rain will serve an ideal purpose in bolstering topsoil moisture from eastern and southern Argentina through southern and eastern Brazil and allowing for planting progress to occur quite favorably.
El Niño Factor
Some reduction in rain frequency and intensity may occur in October and November, but there is no blocking ridge of high pressure advertised that would take the fine start to the rainy season and turn it into a more threatening environment. Even though El Niño has not been a significant feature in recent weeks, changes in ocean temperatures in the tropical eastern Pacific Ocean are suggesting a resumption in El Niño development later in September. The El Niño event will then prevail through the last quarter of 2014.
The return of developing El Niño conditions will only reinforce the favorable outlook for Brazil crop areas. Rain that will be most significant in southern and eastern parts of crop country September through November will likely become heavy in the December through February period with abundant and well-timed rainfall occurring to support all of Brazil’s huge corn and soybean crops that are being advertised for this year. El Niño will only see to it that yields are high. There may be a short-term period of excessive moisture that may threaten crops, but no serious problem is expected that would greatly reduce the large volume of grain, oilseeds, sugar and other commodities that will be derived from the favorable environment and increased planted area.
Argentina weather may not be quite as ideal as that in Brazil, with some lingering dryness in the western parts of the nation during the spring. However, the drier bias is not likely to evolve into a serious drought like that which has occurred in some other El Niño years. But the situation will be closely monitored for a tendency toward some drier biased conditions at times. Cordoba, Santiago del Estero, western Santa Fe and a few immediate neighboring areas will be closely monitored for dryness, but the odds will likely end up stacked against a serious problem.
Most meteorologists and climatologists are looking for some typical El Niño-biased precipitation anomalies during the fourth quarter of 2014 and first quarter 2015. Most of the problems are expected to be in tropical regions of the world with ongoing drier than usual biases in Central America, northern South America, Central Africa, Indonesia, Malaysia, northeastern Australia, South Africa and a few other areas in Southeast Asia.
In the case of Australia, eastern wheat production areas in the nation will suffer some decrease in production with the returning El Niño bias. Some of the sorghum and cotton produced in the region may also be stressed later in the growing season as El Niño evolves. The El Niño event is expected to be weak, however, and its dominance and adversity may not be as great as it has been in the past.
South Africa corn production will be down because of El Niño and that will follow a poor performance of winter wheat because of drought in eastern parts of the nation. Despite these potential problems in the Southern Hemisphere, no greater influence on world grain and oilseed trade will be present than that of Brazil and Argentina. If their weather is going to be good, it will likely lead the way in futures and cash prices over the next several months, especially after the high U.S. production year and anticipated good production from parts of Canada and portions of China, Europe and the Commonwealth of Independent States.
Northern Hemisphere outlook
In the meantime, planting weather in major winter wheat production areas around the Northern Hemisphere in the next few weeks is expected to be favorable with no broad regions of extreme dryness or excessive moisture. Western Europe will trend drier than usual this autumn, but that will only perpetuate planting progress. There may be some excessive moisture in southeastern Europe and across a part of Turkey and the immediate Black Sea region. Wheat planting moisture in the U.S. Plains will be favorable as well.
China may have a little drier biased wheat planting season this autumn. Soil moisture will be favorable from summer rainfall, but as time moves along there will be some concern over dryness in a part of the production region. China, however, irrigates much of its crop and the weather adversity is not likely to have a very big influence on world trade or local production.
Despite all of the positive comments about production in 2014-15, the one lesson learned well in recent years is that even when we think we know what is going to happen we really do not know much at all. Nobody saw the big 2012 U.S. drought coming and no one expected the big heat wave and drought in Russia during 2010. Needless to say, this year’s El Niño was supposed to be the greatest event since 1997-98. Not only did we fail to see a “super El Nino,” but the event never fully emerged.
The moral of the story is despite the “everything is coming up roses” scenario for South America’s weather in the next few months, things can change and the situation will still need be closely monitored.
Drew Lerner is a senior agricultural meteorologist with World Weather, Inc. He may be reached at email@example.com. World Weather, Inc. forecasts and comments pertaining to present, past and future weather conditions included in this report constitute the corporation’s judgment as of the date of this report and are subject to change without notice.