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February WASDE report highlights implications of international weather

February WASDE report highlights implications of international weather

Argentine drought is good news for U.S. growers

By Diego Flammini
News Reporter

Weather concerns in South America are good news for farmers in the United States, according to Moe Agostino, chief commodity strategist with Risk Management.

Almost 60 per cent of Argentina’s soybeans are at risk due to drought and about 30 per cent of the country’s corn crop is in poor condition, meaning production levels are dropping.

“That’s a game changer and small crops get smaller,” he told today. “Argentina needs rain, but it doesn’t look like it’s going to get it.”

Ending U.S. soybean stocks in the February World Agricultural Supply Demand and Estimates (WASDE) report is 530 million bushels, the USDA said.

But the USDA is going to have to make the necessary market adjustments to reflect the current crops in Argentina.

“The USDA is going to have to come to grips that it’s game over,” Agostino said. “There are no rains that are going to help this crop and the Argentine soybean and corn crop are going to get smaller in the next few weeks.”

The average soybean price range for 2017-18 is between US$8.90 and US$9.70 per bushel, according to the USDA.

And the average corn price is projected at US$3.30 per bushel.

But those prices could go up, Agostino said.

“There’s no question this is good news for the U.S. farmer,” he said. “Futures are going to rise. And if farmers can be patient, they’ll be rewarded.”

Drought conditions on U.S. farms could also impact commodity prices.

Some of the winter wheat states in the country are experiencing dry weather. The crop still has time to receive the moisture it needs, but time is ticking, Agostino said.

“We could get those April showers to replenish some of the subsoil moisture that’s missing, but that’s a big question,” he said.

The average farm price range for wheat is between US$4.55 and US$4.65, according to the USDA.

The next WASDE report will be released on Mar. 8.

For exclusive access to Moe Agostino's live monthly WASDE analysis and other risk management services, sign up for a free eight-week trial.

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