This week a Tuesday soybean rally was fueled in part by dryness reports in Argentina. But if you look deeper at where that dryness is and how negligible corn and soybeans acres are in the area, was the dryness issue overstated? HAT chief meteorologist Ryan Martin says, “definitely.”
He told HAT, “I don’t think it’s just been overstated during the past week but for the entire length of time that we’ve tried to have dryness in as a talking point on the markets. You look at where the best dryness has been developing and that’s been in the south and southwest corner of Argentina where rains have come in recently. I think if you look at the grouping on the whole, you’ve got to say less than ten percent of Argentina’s crop areas can be slightly dry. I don’t think anybody is abnormally dry or to the point where we’re going to see significant losses. Even folks talking about dryness in Brazil aren’t looking at it in a big-picture kind of way. I’d say less than five percent of crop areas in Brazil are having problems with any kind of weather issue right now.”
Real weather problems across all of South America are what the US market would need to stimulate a rally, but it’s just not materializing.
“Weather problems in South America are just not a big talking point that we can really trade on at this point because we’ve got good rains falling everywhere. And here’s the key, if we go back and talk about some of these dry areas that have been talked about to this point, even if you want to agree and say maybe there’s some dryness, that ten percent of Argentina, that five percent of Brazil, let’s talk dryness there. In Argentina at least, temperatures have been normal to below normal, so it’s not like we’re hot and dry. We’re just maybe a little dry and seasonal or even cool at this point.”
Martin said temperatures are starting to creep up in parts of northeastern Brazil where it has also been a little dryer, but it is nothing oppressive. So if you’re banking on a US market rally due to South American weather, so far you’re barking up the wrong tree.