There has been a lot of chatter about La Nina and historical trends of below normal soybean and corn production this winter (South American summer). While typically, grain yields can fall from warm-dry weather through December-February in Argentina, this is not written in stone.
Our CLIMATECH program shows the projected Dec-Feb rainfall patterns for South America. Of importance is also the Antarctic Oscillation Index. This is similar to the Polar Vortex in the northern Hemisphere that we sometimes talk about that can excite natural gas traders with extreme cold in the U.S.
Given the stronger U.S. dollar, heavy long position in soybeans and some Chinese processing plants closing down due to pollution issues, the next big move in soybeans may be down with rains coming for key Argentina and southern Brazil regions and “more than many meteorologists feel!” However, as we head into January, some concerns may mount about soybeans being too warm and dry over 20-30% of the belt, making for a volatile trade.
CLIMATECH suggests great rains overall for much of Brazil during the December-February period. But the atmosphere is not acting strictly like a La Nina. The result? Some adjustments in the forecast towards some drier weather could occur in northern Brazil causing some issues in January.
