The lack of rainfall is being felt in the core productive zone, especially in the northeast of Buenos Aires and the south of Santa Fe, where crops (first-crop soy and late corn) are suffering from generalized stress due to heat and drought. Pergamino has lost 50% of its potential, according to an investigation by the Noticias Argentinas agency. January ended with 66% less rainfall. While in a normal January, between 100 and 120 mm fall, according to the average of the last 30 years, the accumulated average in the core region is barely 38 mm. The core region ends the month with an average rainfall of less than 40 mm, when normally it rains 110 mm. The lack of water particularly shortens the yield potential of the northeast of Buenos Aires. The pressure of heat and drought affects first-crop soybeans and half of the late corn. The survey was conducted by the Rosario Stock Exchange, which highlighted that of the 36 meteorological stations in the BCR-GEA network, only one reached the historical average: General Pinto, with 122 mm, in the northwest of Buenos Aires. It was the most favored by the rainfall events of the month. In adjacent areas, the accumulated rainfall, although below the historical average, ranged between 45 and 90 mm. In contrast, the central strip of the core region is the most compromised area: in Álvarez, only 9 mm were registered, the lowest value of the month. Other stations such as Pujato, Maggiolo, and Godeken also did not escape the deficit, with minimum accumulations of 10 to 11 mm.
The picture of soil water reserves is clear: the drought is deepening, with half of the area under this condition, especially in the central strip of the region, and the rest, with water scarcity. Only in the southern part of the region do some nuclei with regular conditions still persist. In the last seven days, some rains have been recorded, organized in three events, which were concentrated almost exclusively in the west of the core region. The most encouraging signal appears only in mid-February, when a front could enter with a chance to break the current atmospheric block and enable precipitation over the center of the core region.
Futures markets are not escaping the lack of predictability that mainly afflicts the climate. Commodities gave up 5.3% last week after having recorded a 16.5% rise in the last six months. At the beginning of the week, there was a massive liquidation of commodity futures contracts in the US (“commodities”), which helps reduce the value of agribusiness goods regardless of the intrinsic market factors of each product. Soybean futures ended the day in positive territory, recovering after three consecutive days of declines. Prices strengthened after the proposal to change regulation 45Z, which extended the validity of tax credits for biofuels until 2029, also including soybean oil, which is used for biodiesel and HVO. Gains were limited by the advance of the soybean harvest in Brazil, which directly competes with US production for Chinese purchases. In this sense, StoneX and Celeres raised their yield and volume projections for the 2025/26 bean campaign in this country. Meanwhile, the weakness of the dollar and the reduction in tensions between Iran and the United States contributed to the push in wheat prices. However, the increases were limited as concerns about adverse climate effects on crops in the US and the Black Sea were reduced. Corn marked gains in Chicago this Tuesday.
The change in regulation 45Z extended the validity of tax credits for biofuels until 2029, which benefits the ethanol industry and served as a support for the price of the grain. In the same vein, domestic consumption of corn for the biofuel industry set an additional record for volume processed in December.
