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AGRIBANK RELEASES INSIGHTS REPORT ON WEATHER IMPACT ON CROP PRODUCTION
Source: AgriBank news release

As El Niņo gives way to La Niņa, widespread wet weather is expected to be followed by drier conditions and warmer than normal temperatures. So what do El Niņo and La Niņa mean for corn, soybeans, wheat and rice producers?

A new report issued by AgriBank, the St. Paul-based Farm Credit Bank finds that during prior El Niņo-to-La Niņa periods, crop prices tended to spike in reaction to lower yields. However, for 2016, the normally favorable transition year most likely won't offset current pricing headwinds. Those pricing headwinds include recent domestic bumper crops, ample worldwide corn and soybean stocks, and a strong
U.S. dollar that hinders exports.

The report provides an overview of recent weather patterns and forecasts and their impact on crop production across the 15-state AgriBank District, including corn, soybeans, wheat and rice. It follows last year's report on the impacts of El Niņo on production.

HIGHLIGHTS

* EL NIŅO BRINGS WIDESPREAD PRECIPITATION. Current El Niņo weather patterns have jogged a bit further north than normal. This has delivered more widespread - and in some cases, unexpected - wet weather across the country.

* LA NIŅA TO FOLLOW WITH WARMER, DRIER CONDITIONS. As El Niņo gradually gives way to an expected La Niņa event later this year, temperatures from May through July are forecast to remain above normal, while precipitation is forecast to be below average for much of the eastern part of the District, with southern Michigan, northern Indiana and all of Ohio having the strongest odds for drier conditions.

* NEGLIBLE IMPACT ON COMMODITY PRICES. While the El Niņo weather pattern will likely persist through the spring, it has yet to materially affect price futures on grains and oilseeds. Taken as a whole, this scenario does not support any strong upward price moves for the upcoming season.

"Commodity prices have been reset down drastically over the past couple of years and have had a direct impact on producers' profitability," said Jeff Swanhorst, AgriBank executive vice president of credit and chief credit officer. "Based on available commodity price forecasts, I expect a similar price environment in crops over the next three to five years unless we have a significant weather event here in the U.S. or another major crop-producing country."

AgriBank Farm Credit Bank provides financial solutions to meet the needs of production agriculture in America's heartland. We feature our research and analysis in AgriBank Insights as part of our AgriThought initiative to help inform the financial decisions among those we serve.


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