January 15, 2009

Brazil's grains and oilseeds harvest should fall slightly more than 5 percent this year due to poor weather conditions in the south and part of the Center-West, said Agriculture Minister Reinhold Stephanes on Tuesday (Jan 13).

The National Commodities Corp. (Conab) had recently forecast that this year's harvest would fall 4.9 percent to 137 million tonnes.

Stephanes said a 6-percent drop in fertiliser consumption will contribute to a smaller harvest.

Brazil's 2008-09 soy crop forecast was pulled back to 57.85 million tonnes from December's estimation of 59.2 million tonnes, due to drought in the southern grain belt, said independent analyst AgraFNP.

The drought in Parana and Rio Grande do Sul will lower soy production by 1.1 million tonnes, said AgraFNP grains specialist Pedro Collussi.

Conab has also trimmed its soy forecast to 57.8 million tonnes from the 58.8 million projected in December.

For corn, AgraFNP reduced its forecast to 48.4 million tonnes from December's estimation of 52.17 million tonnes, also due to the dry weather. Conab has also reduced the new corn crop to 52.3 million tonnes from its December forecast of 54.4 million tonnes.

The corn crop was more vulnerable to poor rainfalls due to its stage of development.

Rains have been falling in the southern grain states and parts of the center-west in the past few weeks, but it will do little to revert the losses already caused by the drought. More rains will be needed in the south in the next few weeks to avoid further losses in the corn and soy crops.

US soy futures have been rising steadily in the past few weeks due to concerns of dry weather in South America.