The weather phenomenon La Niña is rearing her ugly head in South America with two very different events and only one answer.

ARGENTINA

Let's start with Argentina, the world's third-largest bean producer exporter and second-largest corn producer exporter. Drought has lingered since planting began late 2011. January is a key yield development month when yields are made or lost. The country has had only one measurable rain event since the month began.

WXRISK.COM, an industry used weather site, sees no measurable rain before Feb. 4, which will be 90% through yield time. Leaving the question: What is the final production number?

Argentina's worst drought on record in 2008 cut production to only 15 million metric tons. It was supposed to produce 23 million metric tons. The last USDA crop report put its production at 24 million metric tons, and the Argentine grain agency pegged it at 20 million metric tons. Pre-planting estimates hoped for 26 million metric tons.

Well, Argentina grain watchers are now calling this the worst drought ever, even over 2008. Maybe. It's to be determined, but certainly the trade expects further cuts in production. This has the trade expecting the USDA Feb. 9 crop report to cut ending stocks here as it increases our exports to fill the hole in production in Argentina.

BRAZIL

The second La Niña effect is in Brazil, which is the second-largest producer exporter of beans and the third in corn. Brazil has experienced drought in the far southern bean- and corn-growing region and record rains in the central and northern regions.

The six to 10 day outlook calls for up to eight inches of rain to fall. There's an old saying in the bean pit: Beans hate wet feet. We have heard about yield cuts in the south and await word of the potential yield problems north as too much rain saturates the roots subsoil.

WHAT TO WATCH

Well, the first word from growers that a fungus on plants was reported this week. Look for further news like this to surface into mid-February. Buy the dips or any daily profit-taking corrections until this worsening situation runs its course. March corn could test 6.66, and March beans 12.60 near-term.

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