South America Weather and 2017 Outlook - Friday, 23 December 2016

As expected traders in the U.S. have turned much of their attention towards the progress of South America’s crop production.  Market bulls are focused heavily on the dry conditions in Argentina and the longer range outlook for the 2nd quarter of 2017 when a dry pattern is anticipated to develop in Brazil. Kevin Van Trump of the Van Trump Report says, “It feels like there’s starting to be a little more talk about second-crop corn in Brazil and what might happen in the extended forecast.  I personally believe it’s too far off on the horizon to place a weather bet in either direction.  Nearby it seems as if conditions in Argentina have slightly improved.  In other words there seems to be a lot of mixed signals.  As a producer however, late-Feb thru March of 2017, could generate a weather forecast that gives us a spark to the upside.” 

The most recent update on conditions in Argentina report that over the past week the weather has been mostly warm and dry across a large section of central Argentina including areas that were previously too wet, La Pampa, southern Cordoba ad western Buenos Aires.  Near to above normal daytime temps of 90 to 100 degrees F have been present for several days making the topsoil moisture level quite low for the development of summer crops.  There are chances for rainfall over the next several days so stay tuned for further updates. According to the Argentine government 63% of the countries corn was planted as of December 15th, slightly behind last year’s pace. 70% of the soybeans have been planted as well which is also behind last year by 8%.

In the December issue of Wallaces Farmer, Chad Hart, an Iowa State University Extension grain marketing economist was asked his expectations for the 2017 crop year.  Hart said, “It doesn’t matter where we look in agriculture today, supplies are overwhelming demand” and looking ahead to 2017 he projects producers will lose from $50 to $100 per acre on both corn and soybeans.  He foresees soybean acres increasing in 2017 due to the profitability levels of other crops being even worse.  “If there was a better market for another crop, farmers would be moving land to that crop, there isn’t one.  We need demand to continue to increase and weather problems to reduce production somewhere, hopefully not here, to improve our prices.”  He advises farmers to sharpen all of their marketing skills to attempt to squeeze out profits in 2017.  “It’s shaping up as a challenging year, but there are ways to meet the challenges and come out ahead.  It’s not a totally dire situation. We became used to high prices several years ago.  We know how to survive this downturn by controlling costs and using smart marketing.”  Recent acreage estimates for 2017 show that producers expect to plant a record 179.04 million acres to corn and soybeans.  This is up from last year when 177.96 million acres were planted.  Poor profitability for wheat and other crops are turning producers towards corn and soybeans acres for next year.  Surrounding regions of the Corn Belt are where the largest number of these crops are expected to be planted.

Another strong winter storm is headed for the northern Midwest over the Christmas holiday weekend bringing with it the possibility of over +12 inches of snow . Other areas of the Midwest are preparing for a wide variety of precipitation from snow and ice to near record high temps and severe thunderstorms.  The map below shows the wide variety of precipitation and where they are expected to fall.

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