30 Aug 2023
El Niño favors South American soy, but draws more attention to northern Brazil
The natural phenomenon brings challenges and opportunities for the 2023/24 soy harvest in South America, impacting production and prices.
The anticipated rise in moisture levels across the southern continent might lead to an upswing in soybean production in Rio Grande do Sul (historically the third-largest soybean producing state in Brazil), a substantial new harvest in Paraná (the country’s second-largest producer), and in Argentina. This development follows periods of frustration caused by droughts linked to La Niña.
The resurgence of El Niño is anticipated to influence the 2023/24 soybean harvest in South America by bringing beneficial rainfall to southern Brazil and neighboring countries like Argentina. Nonetheless, this climatic phenomenon also carries the prospect of uneven precipitation across various regions in Brazil during the season, presenting challenges for producers as outlined by meteorologists and specialists.
Deviant higher temperatures in the Equatorial Pacific waters point to a mild to moderate El Niño, as indicated by meteorologists. This climatic pattern holds the potential to drive Brazil, the predominant global force in soybean production and export, towards a groundbreaking soy harvest. Estimates suggest that this time, Brazil might achieve a production of over 160 million tons, notwithstanding the potential constraint on rainfall in regions such as the Brazilian Northeast.
“Examining the maps, we observe a distinctly typical El Niño pattern, characterized by above-average rainfall in southern Brazil and below-average precipitation in the North and Northeast. Broadly speaking, our initial projections foresee a substantial harvest in Brazil and Argentina,” remarked Luiz Fernando Roque, an analyst from Safras & Mercado.
“The mapping data presents highly favorable conditions for Argentina; all indications point toward a noteworthy rebound, with the nation poised to yield between 45 and 48 million tons,” he added. The USDA reported Argentina’s output as 25 million tons in the previous harvest.
Should these forecasts prove accurate for the approaching season, commencing planting roughly in mid-September in Mato Grosso – a Brazilian state with a production akin to Argentina’s – the nations of South America, including Paraguay, could potentially contribute to almost two-thirds of the global soybean exports in the 2023/24 period. These exports are projected to reach approximately 169 million tons according to USDA estimations.
Under this scenario, soy prices would remain subjected to pressure, given that they are presently at reduced levels following Brazil’s harvest of approximately 155 million tons in 2022/23, despite the drought experienced in Rio Grande do Sul. Although Argentina doesn’t hold the same status as Brazil and the United States as a key soybean exporter, it would regain its position as the dominant force in the global soybean meal market – the country is a frontrunner in terms of soybean oil.
“We’re no longer anticipating identical yields as those of the previous season for the Midwest and Southeast regions… this doesn’t imply a complete crop failure, but the maps are sounding an alert,” he said.
Antonio Galvan, president of Aprosoja Brasil, an organization that represents farmers, evaluated that, depending on its degree, El Niño could affect parts of Mato Grosso and Goiás.
“Now, regardless of that, we need to plant… we believe we might have a better, record-breaking harvest… but due to lower prices, we don’t see farmers eager to expand the planted area, as they did in previous years… so if El Niño causes more issues, we might not achieve the same numbers as this year,” he said.
As per meteorologist Desirée Brandt from Nottus, the heightened irregularity in climate is expected to impact the Northeast, encompassing states within the region identified as Matopiba. While not an optimal scenario, she emphasizes that it will be a considerable improvement from the challenges faced in 2015/16 during a potent El Niño phase.
Brandt elaborated that due to the increased warmth of the Atlantic Ocean, “it serves as a safeguard against more severe drought conditions in the Northeast.”
Planting Risks
The climatic phenomenon tends to accelerate springtime rainfall in the Midwest, yet it will be sporadic, necessitating farmers’ careful consideration during the initial planting stages to prevent the potential waste of sowing efforts.
These hazards encompass both the amount of rainfall and its localized nature. “Throughout the entire spring and summer, this pattern is most likely to persist… every so often, the rain might be widespread, but more frequently it will be isolated,” the meteorologist supplemented.
As outlined by Brandt, a prudent approach might lead to a more gradual commencement of planting by farmers. Agro-meteorologist Marco Antônio dos Santos from Rural Climate concurs that El Niño is “not near” a state of strength, and because it’s not “fully developed,” it will bring unpredictable rainfall patterns until October.
There will be limited rainfall in September. Rainfall will occur in certain regions and be absent in others. Some individuals might begin planting on September 10, while others might delay,” he observed, emphasizing that this doesn’t indicate a complete lack of rainfall.
Source: Forbes Agro
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