Market talks: The influence of La Niña phenomenon at soy and corn harvests this year

Author Argus

The La Niña phenomenon always brings concerns in Brazilian agriculture, since it usually reduces rainfall volumes in the country’s southern regions. Meteorologists confirm that this weather pattern is present for the third year in a row and will extend throughout the start of the 2022-23 crop year. But will it be as intense this time as last season? And what other weather factors will influence the Brazilian agricultural output?

Join Camila Dias, Argus Brazil Country Manager, and Alessandra Mello, deputy editor for the Argus Brazil Grains and Fertilizer publication, as they talk about the latest weather forecasts and their impacts on the 2022-23 Brazilian crop season.

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Transcript

CD: Hello and welcome to 'Market Talks' - a series of weekly podcasts produced by Argus discussing the main events impacting the commodities and energy sectors in Brazil and around the world. My name is Camila Dias, Argus Brazil Country Manager. In today's episode, I talk with Alessandra Mello, deputy editor of the Argus Brazil Grains and Fertilizer publication, about the influence that the La Niña weather phenomenon may have on the 2022-23 soybean and corn crops in Brazil, which are set to post record numbers. Welcome, Alessandra.

AM: Thank you, Camila, I am glad to be here once again.

CD: Alessandra, we know that weather is a key factor in any country’s agricultural production, so there is always an expectation at the beginning of each harvest... will the La Niña phenomenon influence Brazilian agriculture once again in the 2022-23 season, which is starting now?

AM: Yes, it will, Camila, but the effects are not expected to be as intense this year. And I can give you more details about it. First, it is necessary to reinforce that La Niña phenomenon, which is the cooling of the Pacific Ocean’s waters, is already being seen at this time and is expected to persist until early 2023 (twenty-twenty three) in Brazil. We have confirmed this information with two of the main meteorological companies in Brazil, Climatempo and Rural Clima, which follow international models. It is true that some models show a slightly lower (actually, practically non-existent) intensity, but the NOAA, the US National Oceanic and Atmospheric Administration, which is a major reference in this field, indicates the phenomenon’s presence. This kind of news is always worrisome because La Niña usually brings, especially in Brazil’s southern region, a greater chance of long periods without rain, when the crop is in the development stage.

This will probably be the third consecutive season that La Niña can influence Brazilian agriculture. The phenomenon has only affected the country's crop for such a long period twice — once in the 1970s and another instance at the end of the 1990s, Climatempo meteorologist Nadiara Pereira told Argus. In the 2021-22 soybean harvest, the lack of rain in two of the country's main producing states, Rio Grande do Sul and Parana, caused more than 20mn t of production losses. Brazil was expected to harvest more than 145mn t, as planting was finished within the ideal timeframe, but the national supply company's (Conab) last report estimated an output of 124mn t.

CD: Alessandra, but La Niña’s presence is no guarantee that the effects will be severe again, right? I imagine that the intensity of this phenomenon is also a factor to be considered...

AM: No doubt, Camila, that is very important. The expectation this year is that the La Niña phenomenon will have a weaker impact on the 22-23 (twenty-two twenty-three) soybean and corn crops. And this has reinforced the estimates of a record harvest in Brazil. First, everyone agrees that the intensity will be weak to moderate. And meteorologists believe that La Niña will be in a weakening phase by early summer in Brazil, which starts in late December.

The alert still exists for the spring period. Rio Grande do Sul, for example, may still face drought periods in early spring, especially from September to December. But soybeans in the state are planted mainly in November. So, in the most important stages for crop development, the weather will already be closer to normal. In any case, Climatempo forecasts rainfall below the historical average, but still above volumes recorded in the last harvest in the southern region of the country and in part of Mato Grosso do Sul state.

CD: And do we have any other risk factors for the weather this season besides La Niña?

AM: Yes, this is also an important aspect. We talked with the agrometeorologist from Rural Clima, Ludmila Camparoto, and she said that other factors unrelated to La Niña have been altering Brazil's southern region's rainfall. One of them is the change in the Atlantic Ocean's temperature, which was one of the causes for last summer's severe drought, from December-March. But this phenomenon cannot be anticipated as assertively as La Niña. When Atlantic waters are warmer, cold fronts cause more regular rainfall with better quality. Likewise, when the opposite occurs, the precipitation becomes irregular. But that is still impossible to predict, she says.

CD: Alessandra, how will the weather behave in the central-west region, where Mato Grosso state the largest soybean and corn producer in Brazil, is?

AM: Well, Camila, I spoke to the meteorologists in July and the predicted impact was already very specific in the Central-west region. Later in August, they told me that it is becoming clearer that rain will still be scarce in September, especially in the first half of the month. The situation should only improve at the end of September. And in early October, there may still be very irregular rainfall. This will probably slightly delay soybean planting in some areas, but not in others. It is something that should not be generalized. Rural Clima forecasts good conditions for soybeans and estimates a harvest production potential of 155mn t in 2022-23, an absolute record. And Conab recently made a projection of 150mn t. But the Conab technicians emphasized that it is still too early to be sure that there will be no surprises regarding the weather. If there are long periods without rain, these figures will certainly be revised throughout the season.

CD: And how about the second corn harvest, which is currently the largest in the country? Will it also be affected by the weather?

AM: Well, the second corn crop starts its planting in January, immediately after the soy harvest, in the same areas. For now, projections are optimistic, because, as I said, there should be no significant delay in soybeans planting timeframe, so corn sowing would not be so late either. In addition, the La Niña cycle may have already ended when the most important development stages for the crop begin. Projections for now show that La Niña should last at most until March. And it will be weaker. In this scenario, Rural Clima projects a production potential of 118mn t for the total Brazilian corn crop in the next cycle. Conab is expecting a much higher production, of 125.5mn t for the 2022-23 total corn crop.

CD: Are there any other points of attention?

AM: Yes, meteorologists are also concerned about irregular rainfall. January is expected to be rainier in the southeast and in the central-west, but there may be a rain cut in February. Droughts can affect some areas within the same state, while leaving others untouched, so a record grain and oilseed harvest is still expected. Such a situation occurred this year in the second corn crop in Mato Grosso, when some areas of the state went almost a month without rain, but a record crop was still harvested because of high yields in other parts of the state and the advance of the planted area. Now it is time to hope for favorable weather and that new production records are achieved in Brazil.

CD: It´s true, Alessandra, let’s see what happens. Thank you so much.

This and other episodes of our podcast are available on the Argus website at www.argusmedia.com. Visit the page to follow the events that affect global commodity markets and understand their developments in Brazil and in Latin America. We'll be back soon with another edition of “Market Talks”. See you soon!

 

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