Currently I’m following the news of the US drought every day with great attention, as it is the most important factor influencing the markets.
Until now, the weather has not changed substantially. So much so that in the next few days the forecast only mentions widely scattered showers and volumes well below normal records. This means the damage to maize crops will be irreversible.
Soya bean production has also been affected, but the fall in production could be offset by the expected good harvest in South America.
At the moment I still have more than a month to decide the planting of summer crops, namely the area between maize and soya beans. The soya bean/maize price ratio is very close to 1.6/1, one of the most favourable ratios for maize in the past decade.
Current futures prices are $200/t for maize and $320/t for soya beans. This year I had planned to drill 65ha of maize and 46ha of sorghum, 20% of my total plantings. But the favourable ration may tempt me to increase my maize area.
On the other hand, rumours in recent days is that the government is trying to increase taxes on soya bean exports from 35% to 40% and this has left soya bean markets paralysed, making it even more advantageous for maize.
Soya bean prices rising above $600/t in Chicago suggests to government officials that farmers are getting an “extraordinary income” which should be shared by the rest of the population. But officials need reminding that even at the current 35%, there is no possibility of great results with soya beans, unless there are good rains (El Niño) or good prices.
Federico Rolle farms 2,250ha of rented arable land in the Pampa area of Argentina. He grows soya beans, sorghum, maize and wheat using no-till techniques and GM crops. He has a part-time role helping Brown & Co in the region.