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Rains to bring relief for Argentinian wheat, corn: BCR

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Rains to bring relief for Argentinian wheat, corn: BCR

Highlights

Heavy rains expected to improve wheat, corn yields

Drought has lowered the crop's output forecast

Rains could pressure wheat, corn futures

New Delhi — Upcoming rains in Argentina are expected to benefit both wheat and corn crops, a report by Rosario Stock Exchange said Oct. 23.

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According to the exchange, known as BCR, upcoming rains will improve wheat crop conditions, which have deteriorated 10 percentage points on the week to 45% in the fair to poor category, due to extensive drought-like conditions in the country.

There is a very good chance that in the last 10 days of October, Argentina will receive heavy rains, particularly in the central regions, the report said.

With the commencement of rains, the six-month long dry season is expected to end in the country.

Due to extensive dryness, Argentinian wheat yield is expected at 29 quintals/ha, down 10 quintals/ha year on year, BCR said. However, the upcoming rains should improve the output prospects for the wheat harvest, which started recently, it added.

Argentinian wheat output for the 2020-21 marketing year (October-September) has been forecast at 16.8 million mt, down 6% on last month's estimates due to extremely dry weather, Buenos Aires Grain Exchange said Oct. 22.

RAINS TO ALSO LIFT CORN

The upcoming rains are expected to boost Argentinian corn productivity as well, BCR said.

With increased soil moisture, corn yield should improve significantly.

Corn planting in Argentina as of Oct. 21 was at 27.5% of the total projected area of 6.3 million hectares for the 2020-2021 marketing year (March-February), BAGE data released Oct. 22 showed.

Argentinian corn production is expected at around 47 million mt in 2020-2021, down from 51.5 million mt in 2019-2020, according to BAGE.

Despite the late October rains, the La Niña threat looms large over the Argentinian agriculture sector from November 2020 to March 2021.

According to the climatologists, La Niña is expected to bring drought in Argentina in coming months, which could significantly lower the output forecast for wheat, corn and soybeans.

At the very least, a drop of 7%-10% can be expected in Argentinian corn and soybeans due to La Niña, analysts said.

Rains in Argentina are expected to pressure corn and wheat futures in coming days.

Currently, December corn futures are trading around $4.175/bu, a 14-month high, while December Chicago SRW futures are trading close to $6.50/bu, a multiyear high, as of Oct 23.