January 9, 2009

The latest 2008-09 Brazilian soy crop estimate by Brazil's National Commodities Supply Corp. is mostly within expectations, showing a slight decrease in production, analysts said Thursday (January 8).

 

Brazil should harvest 57.7 million tonnes of soy in the 2008-09 crop, down 3.8 percent compared to 60 million tonnes from the 2007-08 soy crop, according to the agency, known as Conab.

 

"This is more-or-less in line with our expectation, due to the recent dry weather," said Steve Cachia," a soy analyst at grains brokerage firm Cerealpar.

 

Cerealpar has put its preliminary crop estimate at between 59 million tonnes and 59.5 million tonnes.

 

Cachia said that Conab's estimate did little to buoy Brazil's physical soy trade Thursday, with only a few deals being done in Mato Grosso state, country's the No. 1 soy producer.

 

Brazil's new 2008-09 beans are starting to be harvested in some parts of Mato Grosso, and this is leading to small volumes of business, said Cachia. Mato Grosso is traditionally the first state to complete planting and to start harvesting.

 

March soy is 7 cents higher Thursday at US$9.97 on the Chicago Board of Trade.

 

Glauco Monte, a soy consultant at FCStone, cautioned that if the dry weather in the south of Brazil continues, production could fall further to 55 million tonnes.

 

However, rain is expected across most areas in the south in the coming days so this should help, he said.

 

Parana state, the No. 2 soy producer, and Rio Grande do Sul, the No. 3 soy producer, have seen a prolonged drought since November. Recent rains have fallen in some areas, but hundreds of miles away in other parts such as west Parana, the soil remains brittle and dry.

 

Otherwise, Brazil's soy crop is developing well across most of Brazil, including Mato Grosso, the No. 1 soy-producing state, Monte said.

 

Seneri Paludo, an analyst at Mato Grosso's Agricultural Economy Institute, or Imea, said that Conab's estimate for the state is close to 16.6 million tonnes for Mato Grosso.

 

Paludo said that credit has been a problem for farmers in the state, but this won't further affect the 2008-09 crop, which is already 100 percent planted.

 

He said, however, that the 2009-10 crop could be hurt if the shortage of credit continues. But he said it's still too early to give a crop estimate.

 

Brazil is the world's second-largest producer of soy, after the US.