South American weather, something to watch: Grain market daily

Wednesday, 8 December 2021

Market commentary

  • UK feed wheat futures (May-22) closed down £0.70/t to £230.50/t yesterday. Though the Nov-22 contract remained unchanged at £204.00/t.
  • Trade awaits price direction from the USDA’s world agricultural supply and demand estimates due out tomorrow (09 Dec).
  • FranceAgriMer has revised the 2021/22 season French soft wheat exports to outside the EU down 0.2Mt to 9.2Mt. Exports within the EU bloc remained at 7.8Mt, and ending stocks were raised 0.3Mt to 3.5Mt.
  • US biofuel mandates have been proposed by the US Environmental Protection Agency (EPA) for 2020 (at 17.13B gallons), 2021 (18.52B gallons) and 2022 (20.77B gallons). Retroactive mandates for 2020 and 2021 are below 2019 levels. But 2022 is a proposed increase from 2019. According to Refinitiv, the EPA have also proposed to reject 65 applications for small refinery exemptions.
Image of staff member Megan Hesketh

Megan Hesketh

Senior Economist - Agribusiness

See full bio

Have you found this page useful? Rate it here

South American weather, something to watch.

With rain causing quality concerns for the Australian harvest, the La Niña weather event is reportedly “in play” in Australia.

According to the World Meteorological Organisation, there is a 90% chance of Pacific Sea surface temperatures remaining at La Niña levels in December. As well as a 70 to 80% chance (moderate) to persist through quarter 1 2022 (Jan to March).

On the other side of the Pacific, the La Niña event is also causing South American dryness concerns and we are seeing dry weather impact on soil moisture.

Figure showing dry soil moisture in South America

Brazilian dryness is specifically an area to watch, given this dryness covers key maize and soyabean producing states.

Rio Grande do Sul received less-than-normal rainfall in November. Until a fortnight ago some parts of the state had experienced 40 days without rain.

Why is this important?

Rio Grande do Sul on average produces 20% of the first maize crop, 7% of the overall maize crop (including second crop) and 16% of the total soyabean crop (2017-2019).

Soyabean plant germination in this state will become a concern if dryness persists. If realised a significant proportion may need to be replanted once soil conditions improve. This current dryness is having implications for the first maize crop as it goes through the pollinating and grain filling phase (Soyabean and Corn Advisor).

As displayed in the map, there is moisture stress in the Parana region too. Though it is too early to tell the impact on yields. This region on average produces 17% of total maize and 16% of total Brazilian soyabeans (2017-2019).

What is short term outlook for South American weather?

In December, Rio Grande do Sul and other Southern regions are due between 10-50mm of rain, which is below average. The Parana region too is set to be drier-than-normal for the next two weeks. Weather forecasts may change, but the La Niña weather front still poses a concern. Trade will be watching closely how much rain falls in Southern Brazil and where, to assess any impact on soyabean germination and maize yields.

Northern and eastern parts of Argentina are also watchpoints. Rainfall looks below normal for December in these key maize and soyabean growing regions (Soyabean and Corn Advisor). Though, so far crop conditions currently look favourable. In the latest Bolsa de Cereales crop report (02 Dec), 90% of maize and 88% of soyabeans look ‘good-to-excellent’.

What impact might this have on the UK?

The world is relying on large South American maize and soyabean crops to ease tight global stocks. As a large exporter, a tightening of South American supplies could result in greater price volatility across the global feed grain and oilseed complex. Should dryness conditions continue, and concerns grow, we could see possible price volatility impacting on UK prices too.

Sign up for regular updates

You can subscribe to receive Grain Market Daily straight to your inbox. Simply fill in your contact details on our online form and select the information you wish to receive.

Visit the Keep in touch page

While AHDB seeks to ensure that the information contained on this webpage is accurate at the time of publication, no warranty is given in respect of the information and data provided. You are responsible for how you use the information. To the maximum extent permitted by law, AHDB accepts no liability for loss, damage or injury howsoever caused or suffered (including that caused by negligence) directly or indirectly in relation to the information or data provided in this publication.

All intellectual property rights in the information and data on this webpage belong to or are licensed by AHDB. You are authorised to use such information for your internal business purposes only and you must not provide this information to any other third parties, including further publication of the information, or for commercial gain in any way whatsoever without the prior written permission of AHDB for each third party disclosure, publication or commercial arrangement. For more information, please see our Terms of Use and Privacy Notice or contact the Director of Corporate Affairs at  © Agriculture and Horticulture Development Board. All rights reserved.