Dry weather seen keeping Argentina on track to record soy crop

Dry weather in Argentina’s main soy-growing area is forecast to last another two to three weeks, keeping the grains powerhouse on track toward an expected record crop likely to weigh on already sagging world food prices.

In the heart of the farm belt — including parts of Entre Rios, Santa Fe, Cordoba, La Pampa and Buenos Aires provinces — ample yields have formed and are ready to be harvested. The area produces about 80 percent of Argentina’s soy and corn crop.

“This area needs good, dry weather in order for harvesting to proceed, and good weather is on the way. No substantial rains are expected over the two or three weeks ahead,” said Eduardo Sierra, climate advisor to the Buenos Aires Grains Exchange.
“This is positive for production volume but not for prices.”

Dry soil helps harvesting machines move quickly over fields, helping to capture full yield potential.

Last week, the exchange increased its 2014-15 Argentine soy harvest estimate to a record 58.5 million tonnes, well above the record 54.5 million collected in the 2013-14 season.

A big crop from Argentina — the world’s top exporter of soymeal livestock feed and No. 3 source of beans — would pressure international food prices already sagging under the weight of expected record U.S. and Brazilian grains output.

Demand from commodities-hungry China should keep the price of soy from collapsing even as world production climbs.

Seven months out from a presidential election, the Argentine government is increasing spending. A big soy crop would help keep the public spending tap open by way of the 35 percent tax that the state slaps on soybean exports.

Weather problems in the northern and southern reaches of the farm belt have hurt grains production in marginal growing areas where potential soybean production may be lost due to drought and flooding.

“Dry weather is good for harvesting, but we had a very dry summer, which had a direct impact on our yields,” said farmer Pedro Vigneau, who grows soy and corn in Bolivar, Buenos Aires province, about 100 miles southwest of the central farm belt.

“In the central zone they’ve had a great season with very good yields,” he added.

The U.S. Department of Agriculture forecasts an Argentine 2014-15 soy harvest of 56 million tonnes and a corn take of 23.5 million tonnes.