BLBG:La Nina Seen Near Peak as Dryness Parches Argentine Corn, Soybean Fields
A La Nina weather event that brought dry weather to Argentina and rains to Southeast Asia may be nearing its peak, said Australia’s Bureau of Meteorology.
While the system remains established over the Pacific Basin, strength indicators have weakened slightly from last week, the bureau said on its website today. Dryness has parched corn and soybean fields in South America while rains have flooded rubber and palm plantations in Thailand and Malaysia.
Corn futures have climbed 13 percent in Chicago since Dec. 15 on concern that the lack of rain would cut production in Argentina, the second-biggest corn shipper after the U.S. Soybeans and wheat have rallied 11 percent since the middle of last month. Argentina is the third-largest grower of soybeans and Latin America’s biggest wheat producer.
“Forecast models surveyed by the bureau suggest this La Nina event is at or nearing its peak, although it is likely to persist for the majority of the north Australian wet season,” the bureau said. The 30-day Southern Oscillation Index, used to gauge its strength, was plus 17.5 through Jan. 7, from plus 23 in December, the highest monthly value since April, it said.
Corn for March delivery advanced 0.2 percent to $6.53 a bushel on the Chicago Board of Trade at 6:15 p.m. Singapore time, extending yesterday’s 1.3 percent rise.
Hot, Dry Weather
The dry weather in Argentina may cause more damage than the 2008-2009 drought that was the worst in 70 years, said the Argentine Association of Regional Consortia for Agricultural Experimentation, a farming group, on Jan. 6. Hot, dry weather reduced output in the U.S. to the lowest level in three years in 2011, helping corn post a third annual advance.
Argentina’s soybean crop plunged 31 percent in 2008-2009 to 32 million metric tons, the lowest in seven years, while corn output slumped 30 percent to 15.5 million tons, according to the U.S. Department of Agriculture. Soybeans for March delivery were little changed at $12.325 a bushel in Chicago today.
Without losses in South America, the global corn deficit was expected to narrow to 1 million tons before the next Northern Hemisphere harvest, from 15.8 million tons a year earlier, according to USDA data. That projection assumed that Argentina’s harvest will soar to 29 million tons from 22.5 million tons a year earlier.
Argentina’s corn output could be as low as 22 million tons because of La Nina, Martin Fraguio, executive director of the Maizar association, which represents corn farming groups in Argentina, said Jan. 5.
USDA Estimates
The next USDA outlook scheduled for release Jan. 12 will probably show a “lowering in global corn and soybean production on dry weather causing crop damage in South America, as well as the potential for a further lowering in U.S. corn yields,” Barclays Capital said in a report yesterday.
Palm oil output in Malaysia, the second-largest producer, dropped to a nine-month low in December when the nation’s main growing regions were flooded. Output fell to 1.49 million tons from 1.63 million tons in November, the Malaysian Palm Oil Board said. Palm oil futures were unchanged at 3,215 ringgit ($1,025) a ton in Kuala Lumpur today.
La Nina is expected to persist until the middle of this year, causing higher-than-normal rainfall in Thailand, according to the Thai Meteorological Department. Rubber futures in Tokyo have climbed 3.6 percent this month on concerns rains will disrupt latex tapping.
To contact the reporters for this story: Phoebe Sedgman in Melbourne at psedgman2@bloomberg.net; Luzi Ann Javier in Singapore at ljavier@bloomberg.net;
To contact the editor responsible for this story: James Poole at jpoole4@bloomberg.net
