The weather pattern in Argentina’s main crop belt appears to be turning favorable just as much of the soybean  crop heads into its key growing period, which should prevent further yield losses and may significantly reduce South American crop concerns.
Much of Argentina’s main crop belt received significant rains Sunday night and Monday. North-central areas of Argentina’s top growing province of Buenos Aires received heavy rains of up to 4.20 in. on Monday.
Further rains should fall over the next six to seven days, recharging topsoil moisture in most areas and subsoil moisture in some locations. Some of the best coverage is expected to fall on key soybean-growing areas. Forecasts for next week also call for daily scattered showers.
However, the moisture is too late to help most of the Argentine corn crop, which figures to fall well short of early expectations and may wind up below last year’s harvest. The range of soybean crop estimates is also wide enough to keep buyers uncertain of South American supplies.
Argentina’s agriculture ministry last week lowered its estimate of the country’s 2011-2012 soybean production to 48.9 million metric tons (mmt) from a preliminary estimate of 52-53 mmt and USDA’s recent estimate of 50.5 mmt.
The Buenos Aires Grain Exchange, however, pegged Argentine soybean production at only 46.2 mmt, while private consultant AgroConsult on Tuesday put production at just 45 mmt.
Argentina’s agriculture ministry last week lowered its estimate of 2011-2012 corn production  to 23 mmt compared with its preliminary estimate of 30 mmt and USDA’s recent estimate of 26 mmt.
However, many private estimates of Argentine corn production are lower. The Buenos Aires Grain Exchange last Thursday pegged corn production at 22 mmt, slightly below its 2010-2011 crop estimate of 22.1 mmt.
The Rosario Grain Exchange has pegged production at 21.4 mmt and major commercial grain trader Archer Daniels Midland said on Tuesday that it expects both Argentine soybean production  and corn production to fall below last year’s levels.
While Argentine crops are seeing relief, crop stress will build further in Brazil’s southernmost growing state of Rio Grande do Sul into late this week. The state missed needed rains last week.
Both Rio Grande do Sul, Brazil’s No. 3 soybean state and Parana, its No. 2 producer, last week cut their corn and soybean crop estimates for the second time in January. Losses in southern Brazil will be partially offset by a big crop in Brazil’s center-west soy belt, where drier weather is expected to move in late this week, just as much of the crop is becoming ready for harvest.
However, Brazilian production is expected to fall short of USDA’s current estimate of 74 mmt. CONAB, the supply arm of Brazil’s agriculture ministry has pegged production at 71.75 mmt, but private estimates have dropped lower.
A pair of private Brazilian consultants, AgRural and Safras & Mercados, have each pegged Brazilian soy production at 70.2 mmt.
If South American production estimates don’t shrink further, the upside for soybean prices appears limited over the next couple of months. The world soybean market should be able to absorb the crop losses because world soybean stocks were record large entering 2011-2012 and are seen declining only moderately right now. U.S. soybean ending stocks at the end of 2011-2012 are expected to be the largest in four years.
Editor’s note: Richard Brock, Corn & Soybean Digest's marketing editor, is president of Brock Associates, a farm market advisory firm, and publisher of The Brock Report.