NAFTA & The South American Crop - Thursday, 07 December 2017

Cooling water temps in the tropical Pacific Ocean are prompting weather agencies across the globe to monitor the developing La Nina weather pattern.  This pattern can be difficult to predict and causes a variety of growing conditions.  One of the most memorable for us in the U.S. is the La Nina of 2012 that caused prices to sky-rocket.  Current climate models are suggesting the pattern may be short-lived, lasting into early spring in the northern hemisphere. However, with the enormous supply levels available in the world right now it would be premature to assume we would see a rally of that magnitude even if the weather pattern lasted into the U.S. growing season.

 Informa has reduced their corn estimate for Brazil from 89 MMT to 86 MMT.  These estimates are well below the current USDA forecast for Brazil and last year’s actual production of 98.5 MMT. Reuters reports that the consultancy Safras & Mercado predict Brazil’s corn production will fall by 17% in the 2017/18 crop cycle due to a reduction in planted area and lower market prices. Total corn output is expected at 90.52 MMT, this compares to the 2016/17 Safras estimate of 108.87 MMT.

The South American soybean crop is being closely monitored as fears grow that the La Nina weather pattern may deepen drought like conditions.  Currently 95% of the soybeans in Brazil are planted while only 50% of the soybeans in Argentina have been planted.  Conditions in Argentina are simply too dry to plant.  The upcoming heat is also likely to cause further concerns and discussions regarding the additional crop complications that are likely to develop. A couple of the first problems to appear are issues with germination and uneven emergence due to variable soil moisture. Perdue University has studied effects of dry and hot conditions on soybeans during the early portion of the growth cycle and have found adverse effects. The University tells us that early growth and plant processes like photosynthesis, nodule formation and nitrogen fixation are hampered under these growing conditions. Informa has reduced their forecast for the Brazil soybean crop from 111 MMT to 110 MMT’s.

Reuters reports that President Trump is planning to meet with reps from the oil industry regarding the U.S. biofuel policy.  According to two different sources that were briefed about the meeting believe the White House meeting is likely to involve negotiations over potential legislation to overhaul the current U.S. Renewable Fuel Standard.

The chairman of the Senate Ag Committee, Senator Pat Roberts of Kansas, told Brownfield that he has spoken with the President regarding rural America’s NAFTA concerns.  “I said we’re in a rough patch and there’s still a lot of uncertainty about NAFTA.  Our trading partners, both Canada and Mexico, have been in to see me and every farmer out there knows that they’re making other arrangements.” Roberts does not see the NAFTA modernization discussions ending anytime soon “and as long as the President doesn’t notify Canada and Mexico of an intent to withdraw from the deal he says there is still time to make sure agricultural trade is protected”.  He concluded by saying “it will take some time and effort to make sure the President’s closest advisors fully understand the role NAFTA plays to agriculture”.

Arctic air has made its way across the Midwest and is now reaching the Northeast.  Another surge of cold air later in the week is expected which will keep temperatures across the eastern ½ of the country below normal.  The 6 to 10-day outlook for December 10th -14th continues to show temperatures below normal with below normal precipitation for much of the country.

© 2015 Ag Performance | All Rights Reserved.

Home | About Us | Services | Products | News | Contact Us |