No La Nina Needed for U.S. Corn, Soy Troubles06/21/2016
The agriculture market has been anticipating the entrance of La Nina for several months, and even though it has not officially arrived yet, the associated risk is already present.
La Nina, characterized by cool temperatures in the equatorial Pacific Ocean, will begin soon and is expected to bring unfavorable weather to the United States grain belt this summer, including both damaging heat and prolonged dry spells.
But we do not need La Nina to develop fully before the end of the summer for the impact to be felt in the grains market. In fact, it may be more accurate to say that the absence of El Nino is what heightens the risk for U.S. corn and soybean crops.
The latest weekly sea surface temperature anomaly data from the telling Nino 3.4 region suggests that El Nino is all but dead. (http://reut.rs/28M0k2m)
However, the trade winds have yet to board the La Nina train, as strong westerly bursts over the first two weeks of June have led to a temporary stalling – and even warming – of waters across the four Nino regions in the Pacific.
The wind reversal has slightly delayed the official entrance of La Nina, and the El Nino-Southern Oscillation, known as ENSO, is in the neutral stage between El Nino and La Nina.
La Nina-supporting winds are now in progress in the Nino regions and should persist for at least the next week. This will likely bring temperature anomalies back to zero from their temporarily warmed state, if not below. (http://reut.rs/28Ke1uW).
However, history seems to indicate that both La Nina and ENSO-neutral U.S. summers create much more volatility in corn and soybean yields than El Nino summers.
“La Nada” will suffice
Many climatologists might argue that ENSO has very little impact on the United States in the summer. It is true that El Nino and La Nina generally have a more noticeable presence during the winter months.
But the data is compelling. Better corn and soybean yields are more likely when El Nino is present. But perhaps more importantly, yield potential appears to be limited under both neutral and La Nina conditions, one of which will almost certainly be the atmospheric state during July and August.
The United States has never had a disastrous corn or soybean crop when El Nino conditions are in place during those key months. Of the nine such years since 1970, trend or above trend yields were recorded six times. (http://reut.rs/28KehKx)
When La Nina is present in July and August, one would need to return to the mid 1980s to find an above-average U.S. corn and soybean harvest. (http://tmsnrt.rs/28KemxC)
But in isolating the neutral ENSO years, it is clear that this is when trouble is most likely to brew.
In this case, “neutral” conditions were considered to be present between SST anomalies of 0.1 degree Celsius and minus 0.5 degree Celsius, the possible range for July through August of 2016, if this period indeed ends up neutral.
Of the 16 neutral seasons since 1970, only four were associated with above average soybean yields, and just two with above average corn yields. During those two corn years, 1979 and 2014, which also overlapped on soybeans, El Nino was starting rather than ending, making such outcomes less likely for 2016. (http://reut.rs/28KerBF)
Of course, it must be considered that the amount of occurrences of each phenomenon – El Nino nine times, La Nina 12, and neutral 16 – may have some bearing on the outcome, and may skew results in favor of poor performances during La Nina and neutral.
But it is well proven that U.S. corn and soybean crops have struggled in almost every summer following a strong El Nino to, at minimum, a negative-neutral situation by the end of the year, most notably 1983, 1988, 1995, and 2010.
The 2016 U.S. corn and soybean crops may not encounter significant trouble at all. But the statistics overwhelmingly suggest that this year’s yields are unlikely to outperform expectations, which has happened over the last two years.
La Nina pattern already being felt?
It might be hard to raise the “La Nada” argument if the U.S. summer were chugging along at a completely ideal clip. But there are already red flags.
The actual crops themselves are not the problem. Corn and soybean conditions are about as good as they could be. More than 70 percent of each crop is in good or excellent condition.
But June has been a warm and dry month for a lot of the grain belt, specifically in central Illinois and southern Iowa, the two heavy-hitting states for corn and soybeans.
And even though soil moisture across much of the Midwestern U.S. began this season at some of the highest levels in recent years, this trend can be reversed pretty quickly with some extended dry summer heat.
The U.S. Drought Monitor has begun to reflect some of this heat and dryness, with the most recent update building in abnormally dry conditions across key Midwestern production states. (http://reut.rs/28Kea1v)
Not all weather models and forecasts are in agreement for the next couple of weeks, but heat and dryness are almost guaranteed for at least part of the corn and soybean belt with states west of the Mississippi River at the highest risk.
Still, we have to stifle some of the hype for weather events taking place today because it is still early in the game. Corn does not begin to pollinate in the core production areas until early to mid July, and late July into August for soybeans.
But the weather today affects the soil and crop conditions heading into the sensitive pollination and grain fill stages, so even just a couple days of bad weather now may come back to haunt the crops further down the road.
Source: Karen Braun, Agweek