January 4, 2006

 

Brazilian soy harvest to rise on current good weather

 

 

Favourable weather conditions in Brazil bode well for the 2005/06 soy crop, despite the fact that soy farmers reduced their investments in plant inputs by 25 percent and could be unprotected if the climate changes for the worse over the next two months, sources said.

 

"The climate is taking us in the right direction for a good crop and that's necessary at this point because farmers cut way back on fertiliser and plant defensives, making this year's crop riskier than usual," said David Brew, a soy broker at Brasoja in Rio Grande do Sul state.

 

Although the weather has been favourable overall for soy development, Brew's estimate for the 2005/06 crop runs around 53 million tonnes, compared with the government's official estimate of between 57.4 and 58.5 million tonnes.

 

Plant development is proceeding normally at the roughly 19,000 farms affiliated with the Coamo cooperative, Brazil's largest soy co-op.

 

Despite investment changes, Coamo's technical manager, Antonneio Carlos Ostrowski, believes reduction in plant protection would not make matters worse should the weather change.

 

"It's a matter of desire and necessity. I might want a BMW, even though a Volkswagen buggy will get me where I need to go," Ostrowski said.

 

The cooperative plans to harvest roughly 3.8 million tonnes of soybeans between March and April, compared with 3.1 million tonnes harvested in 2005.

 

Despite the good news on Brazilian soy, soy prices on the CBOT rose 14 cents to US$6.16 per bushel for January at midday Tuesday.

 

"I cannot explain the rise because everything is going well here. Even Argentina got some rains last week," said Fabio Meneghin, an analyst at agriculture market research firm, AgroConsult.

 

Prices rose at the Paranagua port Tuesday to 33.50 real (US$14.31) per 60-kilogramme bag compared with 32.87 real on Dec 27.

 

Premiums paid at the principal soy shipping ports widened to 75 cents a bushel over the CBOT for January deliveries at the Santos Port, compared with 85 cents the previous week.

 

May deliveries out of Santos remain stable at 17 cents.

 

Paranagua port price premiums widened to 72 cents over the CBOT, compared with 80 cents last week.

 

Traders doubt international prices will remain high as the week progresses.

 

"Producers like the prices where they are now, over US$6.12," said a trader at a US soy trading firm in Sao Paulo.

 

"But I don't think they're going to stay at this level which is not good for us. There's no serious concerns with this crop at the moment," the trader said.

 

"The weather is great. If it keeps up, this will be our best crop in over two years," said Airtonne Zalemena, an agronomist at Cootricampo, one of the largest cooperatives in Rio Grande do Sul state with 90,000 hectares of soybeans.