Since December, a significant portion of Argentina’s peanut-production region has received less than half of the usual rainfall. By the end of February, the situation had grown even bleaker.
With less than 25% of the usual February rainfall, scattered showers were far too light to break the continued drought. Temperatures well above average have only exacerbated the loss of soil moisture.
Argentine peanut crop conditions have declined sharply as a consequence. In some locations, the likelihood of crop abandonment is escalating.
Dry and hot conditions have continued through all of the main peanut belt and the general situation continues to worsen for farmers. Moisture reserves are almost nonexistent in most soils. Peanut vegetation has clearly deteriorated over the last 55 days.
Somewhat better crop conditions exist where peanuts can draw moisture from shallow subsoil aquifers or the crop has benefited from scattered, localized rains. But even some of those areas are beginning to show the effects of drought, which has taken a toll across much of the country and across field crops, in general, not just peanuts.
Weather forecasts have given no real encouragement in terms of rain. February is the critical month to make the crop in Argentina and bring it to harvest well ahead of cold growing conditions and possible frost.
Without significant rain in the near term, average yields might be reduced by as much as 50% compared to historic averages.
Since December, the region has received less than half of the usual rainfall. By the end of February, the situation had grown even bleaker. At less than 25% of the usual February rainfall, any scattered showers have been far too light to break the months-long drought.
At present, Argentina’s peanut exporters are not offering peanuts for sale overseas at the current time as the industry waits to see the final yield outcome for this crop. At this point, I believe Argentina’s peanut offers will be held back from the export market until the end of April.
The pre-drought estimate for this crop was 1,400,000 metric tons of farmer-stock peanuts (in-shell peanuts in the hands of farmers). If the final size of the crop is 700,000metric tons of farmer-stock peanuts, this would be a very small final production in terms of making additional sales overseas. Pricing is a clear unknown.
If this scenario takes shape, Argentina’s export markets would likely be supplied by a little tonnage from Brazil, with more from the U.S.
Peanut prices will likely increase sharply among all peanut-producing countries.
This should be good news for U.S. farmers ahead of planting.