Brazil and Argentina's weather situation has been a tale of opposites in recent weeks, and agricultural output is suffering.
Too much rain continues to delay both the soybean harvest and planting of the safrinha corn crop in Brazil.
Simultaneously, production estimates have been cut as drought conditions plague row crop production in Argentina.
As of early last week, Brazilian farmers had harvested about 35 per cent of the planted soybean area - which has been the slowest pace in a decade.
This compares to 49 per cent at the same time last year, and a five-year average of 53 per cent.
Unseasonably dry conditions at the start of planting in October and November mean the crop is a little later than usual.
But, but far more critically, bouts of heavy rain across many production regions in February and early March have prevented farmers from accessing fields to harvest the ripe crop.
The northern Brazil state of Tocantins has been the hardest hit by the deluge.
It rained almost every day in February, with the region receiving about 615 millimetres in the gauge - which is more than twice the state's monthly average.
There are also significant issues in northern Mato Grosso, parts of Goias, Piaui, Maranhao, Para, and Parana.
The quality of the output is a growing concern for farmers and exporters alike.
Some farmers in Tocantins have reportedly abandoned their crops due to seeds sprouting and rotting in the pod.
And grain buyers have refused to accept the worst soybeans because they have inadequate capacity to dry the high moisture product, and limited ability to blend out the low-quality soybeans onto export shipments - and still meet contract standards.
But it seems the flooded paddocks and rotten beans are more of a regional issue than a nation-wide problem, as crop estimates are holding up despite the stories of doom and gloom.
Brazilian government forecaster Conab raised its soybean production forecast by 1.3 million tonnes last week to a record 135.1 million tonnes.
The US Department of Agriculture (USDA) also raised its Brazilian soybean production estimate by 1 million tonnes to 134 million tonnes in its March supply update.
In contrast, agribusiness consultancy SAFRAS & Mercado has hinted its current estimate of 133.1 million tonnes is likely to be reduced in coming days due to poor yields.
And Dr Michael Cordonnier's estimate was unchanged last week at 132 million tonnes.
But he does have a forward bias of neutral to potentially lower due to the wet weather issues.
The late harvest, in conjunction with logistics delays from farm to port, limited soybean exports in February.
The vessel line-up at Brazilian ports reached as high as 19 million tonnes at one stage.
This situation has turned around in March, with exports forecast to reach a record 15.5 million tonnes for the month.
But terminal receivals are being stretched to the limit and long queues are forcing trucks to wait for up to two days to discharge the freshly-reaped soybeans at the port.
The alarmingly slow pace of this year's soybean harvest is a massive headache for the safrinha corn prospects, with planting delays the worst since the 2010-11 season.
The crop represents about 80 per cent of the country's total corn output, a significant proportion of which is exported.
It is sown into soybean stubble immediately after the harvest, and both operations quite often happen on the same day.
The ideal planting window has now passed in many regions, increasing the risk of yield penalties.
The crop will be maturing and hitting its peak moisture requirement as the precipitation traditionally decreases.
When the crop is planted, growers will be praying for the current wet weather to continue into the drier months of May and June.
According to SAFRAS & Mercado, domestic corn consumption will hit a record 77.4 million tonnes this season.
Corn supplies are already tight, raising the possibility that the country will need to import from Paraguay and Argentina in the coming months to quell domestic prices - and bridge the supply gap to the late safrinha crop harvest.
Similar to soybeans, Conab is not buying the lower corn yield story just yet.
It increased its yield forecast from 5.52 tonnes per hectare in February to 5.54t/ha last week.
This pushed production estimates to a record 108.1 million tonnes, compared to 105.5 million tonnes last month - including a 2.7 million tonne jump in expected safrinha crop production to 82.8 million tonnes.
Dr Michael Cordonnier is a little more conservative, leaving his output forecast at 105 million tonnes - and with a neutral to lower forward bias.
In Argentina, the drought that started in mid-2020 and reduced this season's winter crop harvest has continued into 2021.
The country's Pampas farm belt has been exceptionally dry, and recent heatwave conditions have exacerbated the situation.
The early-planted soy fields are approaching harvest, with yields expected to be well below average.
The strong La Nina climate cycle forced the Buenos Aires Grain Exchange (BAGE) to reduce its row crop production forecasts last week, and there is a strong possibility of further downgrades if the dry continues.
It sliced 2 million tonnes from the soybean estimate to 44 million tonnes and 1 million tonnes from the corn estimate to 45 million tonnes.
Some improvement in soil moisture is forecast in the next two weeks, but the hot temperatures will also persist.
In a repeat of 2020 conditions, the second soybean crop - which accounts for 31 per cent of plantings - is the biggest casualty.
In Argentina, the first soybean crop is traditionally planted in late October and early November.
The second crop is planted in late November and early December, immediately following the winter crop harvest.
Recent crop ratings reflect the poor state of the crop.
Early last week, the soybeans were rated at 10 per cent good-to-excellent, compared to 15 per cent a week earlier and 44 per cent last year.
On the flip side, 20 per cent of the crop was rated poor-to-very poor, and the balance of 70 per cent fell into the fair category.
The soil moisture profile was 32 per cent short-to-very short and 68 per cent favourable-to-optimum - the latter was down from 75 per cent last year.
The corn picture is a little better, but still well below average.
The good-to-excellent category captured 25 per cent of the crop, compared to 30 per cent a week earlier and 50 per cent last year; 16 per cent was rated poor-to-very poor; and 59 per cent was rated in fair condition.
The soil moisture status across the corn area was also pegged at 32 per cent short-to-very short, and 68 per cent favourable- to-optimum. But the latter is down from 81 per cent a year earlier.
Stabilisation of the production outlook in South America is critical.
The funds hold sizable long positions in both corn and beans, and seem happy to maintain that stance as long as: there is uncertainty about the size and quality of the South American crops; global demand remains elevated; and the US balance sheet is tight.
The flow of soybeans from Brazil to China is improving rapidly, and Argentina continues to offer corn into the export market - putting a cap on global values.
Other than the weather, the next significant row crop signpost will be the US March Prospective Plantings report from the USDA.
This is due for release at the end of the month.
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