The 2016 soybean and corn crops in the U.S. could face a serious shortfall if they get the full brunt of a La Niña.
“If the El Niño manages to stay with us at least until the first of July, we have a 70% chance of an above average crop yield for the whole Corn Belt. If it switches out of El Niño to a La Niña, it is a 70% chance of a below normal average yield with extremely volatile weather. We hope the El Niño stays with us because it is the friend of the Midwest farmer. Should it disappear, keep track of it. It takes about a month before its effects go away,” Taylor said. “It is No. 3 of the top five recorded El Niño events and it is still going strong. A strong El Niño is often followed by a drought. Around April 15 will be a good time to assess the weather situation with the El Niño.”
With Taylor’s winter weather report in mind, here is what the National Weather Service had to say about the current status of the El Niño on April 14 in their El Nino/Southern Oscillation (ENSO) Diagnostic Discussion.
“Nearly all models predict further weakening of El Niño, with a transition to ENSO-neutral likely during late spring or early summer 2016. Then, the chance of La Niña increases during the late summer or early fall. The official forecast is consistent with the model forecasts, also supported by a historical tendency for La Niña to follow strong El Niño events. A transition to ENSO-neutral is likely during late Northern Hemisphere spring or early summer.”
A La Niña typically brings hot and dry conditions, particularly in the western Corn Belt. Of course, the specifics of the situation will ultimately dictate the true impact of the possible La Niña on crop production and markets, but the stage is set for some significant weather scares in 2016.
So what will happen?
With the looming La Niña threatening crops in the U.S. and in South America, there is plenty of potential for volatile markets ahead. This is cause for farmers selling grain and end users who are buying it to be nervous moving forward.
“Over the last few weeks there have been countless corn and soybean predictions. Corn estimates ranging from less than $3 to over $6 causes sensational headlines, but doesn’t help producers make decisions,” said Jon Scheve, with Superior Feed Ingredients, LLC. “Until harvest, weather will mostly be driving the market. It’s important to keep in mind that opportunities will become available for farmers, but only those with a plan will capture them.”
So will the weather scares push corn to $6 or will booming production send them to $3? The weather realities will set the stage, but in the end, will likely leave them somewhere in between.