NAPERVILLE, Ill., March 13 (Reuters) – Argentina’s extreme drought and associated crop losses have prompted comparisons to the dire U.S. harvests of 2012 or 1988, but Argentina’s situation is more serious from a yield loss perspective.
Stacking Argentina’s 2023 corn and soybean expectations against other well-known crop failures can be helpful in understanding how dire the situation has become.
For simplicity, this analysis focuses on corn and soybean yields in America, which exports three-quarters 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 latest U.S. government estimates, Argentina’s corn and soybean yields are set to fall 29% and 33%, respectively, from long-term trends. These variances may still be too conservative, as many other industry yield sticks are lower.
Argentina’s last notable drought-stricken harvests include 2009 and 2018, and the latest figures suggest 2023 is already worse. Corn and soybean yields fell 13% and 28% below trend in 2009, respectively, and they each fell 24% in 2018.
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Comparable US drought events include 1988 and 2012, when corn yields fell 28% and 24% below trend, respectively. The only other year since that corn loss came close was 1993, when extreme flooding reduced corn yields by 19%.
The US soybean yield shortfall has been far less than what Argentina is currently experiencing. The 1988 yield was 18% below trend, and it fell just 13% in 2012 as late-season rains slowed losses.
There have been much worse results from the state. Minnesota’s 1993 soybean yield was 37% below trend, while North Dakota’s soybean yield was recently 26% lower following the 2021 drought. In 2022, drought and heat in Kansas reduced soybean yields by 34%.
Corn yields fell more than 40% below trend in Illinois and Indiana in 2012 and in Iowa and Minnesota in 1993. By comparison, Nebraska’s 2022 corn yield, the state’s worst in a decade, was 14% below trend.
Like the United States, Brazil’s soybean yield losses tend to be less severe than for corn, in part due to more reliable weather during Brazil’s soybean season and the overall resilience of soybean plants relative to corn.
The geographic variation of Brazilian and US soybean and corn production also limits widespread problems compared to Argentina.
Brazil’s 2022 soybean crop was marred by southern drought, with total yields down 11% from trend, the worst performance in nearly two decades. It followed a terrible second maize harvest in 2021, where drought, heat and frost reduced yields by 27%.
Things were particularly brutal for Brazil’s southernmost state of Rio Grande do Sul in 2022, with soybean yields down 59% from trend and first corn yields down 55%. The state is still under drought this year and yields for both crops could drop by more than 30%.
Parana, also in Brazil’s south, planted second corn very late in 2021 and the weather didn’t cooperate from there, reducing yields by 54% from trend. Last week, this year’s planting progress matched 2021. Parana’s soybean yield fell 40% below the 2022 trend.
Karen Braun is a market analyst for Reuters. Views expressed above are her own.
Writing by Karen Braun Editing by Matthew Lewis
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