Map: Rain in the Forecast for South America

Much-needed rain and cooler temperatures are in the forecast for portions of Argentina and Brazil this weekend, potentially bringing relief to parched corn and soybean crops.

As the map below shows, southern Brazil and Argentina have been trending drier for weeks, with 30-day rainfall only amounting to about 25% of normal in some areas (shown in red). Fears of South American crop damage sent Chicago soybean futures to their highest since July a week ago, while corn pushed to a six-month high in December. More recently, however, both markets have cooled.

In addition to the dryness, portions of Argentina and Brazil also remained in the midst of a major heat wave this week, with temperatures reaching as high as 110 degrees F. With the arrival of the rain, temperatures are expected to moderate as well.

Soybean futures closed lower again on Friday ahead of the expected rain, while corn managed to rebound with moderate gains after recent losses. Markets are likely to react again on Monday, depending on how much rain falls - or doesn't fall - over the weekend.

In its regular monthly supply-demand update released on Wednesday, the USDA lowered projected Brazilian soybean production to 139 million tonnes, down 5 million from December and now just 1 million above the previous year. Expected Argentina production was lowered 3 million tonnes to 46.5 million and Paraguay was reduced to 8.5 million from 10 million. All told, foreign soybean production was dropped a hefty 9.5 million tonnes compared to last month.

For corn, the USDA reduced its estimate of Argentine production by 500,000 tonnes from December to 54 million and Brazil was lowered 3 million to 115 million.

South American 30-day rainfall

Source: DePutter Publishing Ltd.

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