NAPERVILLE, Illinois, March 13 (Reuters) - Argentina’s extreme drought and the associated crop losses have prompted comparisons with the terrible U.S. harvests of 2012 or 1988, but Argentina’s plight is more severe from a yield loss perspective.
Stacking up Argentina’s 2023 corn and soy expectations against other well-known crop failures might be useful in understanding how dire the situation has become.
For simplicity, this analysis focuses on corn and soybean yields in the Americas, which export three-fourths of the world’s corn and soybeans and more than 90% of soy products. Trend yield calculations can be subjective and may vary by analyst.
Using the U.S. government’s latest estimates, Argentina’s corn and soy yields are set to fall 29% and 33%, respectively, from the long-term trends. Those deviations may still be too conservative as many other industry yield pegs are lower.
Argentina’s most recent, notable drought-stricken harvests include 2009 and 2018, and the latest figures suggest 2023 is already worse. Corn and soy yields fell 13% and 28% below trend in 2009, respectively, and they each fell 24% in 2018.
USA
Comparable U.S. drought events include 1988 and 2012, where corn yields fell a respective 28% and 24% below trend. The only other year since where corn losses came anywhere close was 1993, when extreme flooding cut corn yield by 19%.
U.S. soy yield shortfalls have been far lighter than what Argentina is currently experiencing. The 1988 yield was 18% below trend and it fell only 13% in 2012 as late season rains curbed losses.
There have been much poorer results by state. Minnesota’s soy yield in 1993 fell 37% below trend, while more recently, North Dakota’s soy yield was 26% lower following the 2021 drought. In 2022, drought and heat in Kansas clipped soy yields by 34%.
Corn yields fell more than 40% below trend in Illinois and Indiana in 2012, and in Iowa and Minnesota in 1993. For comparison, Nebraska’s 2022 corn yield, the state’s worst in a decade, was 14% under trend.
BRAZIL
Like the United States, Brazil’s soy yield losses tend to be less severe than those for corn, partially owing to more reliable weather during Brazil’s soy season and soybean plants’ overall resiliency versus corn.
The geographical variation of Brazilian and U.S. soy and corn production also limits widespread issues as compared with Argentina.
Brazil’s 2022 soy crop was marred by southern drought and overall yield fell 11% from trend, its worst result in nearly two decades. That followed a horrendous second corn harvest in 2021, when drought, heat and frost reduced yields by 27%.
Things were especially brutal for Brazil’s southernmost state of Rio Grande do Sul in 2022, when soybean yields fell 59% from trend and first corn yields plunged 55%. The state is still under drought this year and yields for both crops may fall more than 30%.
Parana, also in Brazil’s south, planted second-corn very late in 2021 and weather did not cooperate from there, slashing yields 54% from trend. As of last week, this year’s planting progress was similar to 2021. Parana’s soybean yield dropped 40% below trend in 2022. Karen Braun is a market analyst for Reuters. Views expressed above are her own.
(Writing by Karen Braun Editing by Matthew Lewis)
