January 23, 2012

Citing an ongoing dry spell in South America, 2011-12 global soy production forecast has been reduced by the International Grains Council (IGC) Friday (Jan 20).

The IGC forecast soy output at 256.4 million tonnes in 2011-12, down 0.8% from its previous forecast and 4% from the record global harvest in 2010-11. The IGC figures are for the aggregate marketing year of major producing and exporting countries.

Lower output amid record demand is propelling prices higher, with US soy offered at US$461 a tonne, free-on-board, on the Gulf coast Wednesday, up 5.3% since end-November.

The IGC cut its forecast for Argentina by 2.9% to 51 million tonnes, although this is 4.3% higher than actual production in 2010-11. Sowing, which is nearing completion, has been hampered by dry conditions, despite recent beneficial rains, and yields will likely be lower, it said.

The council forecast Brazil's output at 71.8 million tonnes, down 0.5% from its previous forecast and 4.6% from actual production in 2010-11. Crops are relatively more advanced than in Argentina, with harvesting under way. While northern areas of the country's soy belt, notably the key state of Matto Grosso, have received beneficial rains in recent weeks, southern parts remained dry.

In Paraguay, adverse conditions have affected crop prospects, with the IGC projecting output to fall 10% from its previous forecast and 14% on year, to 7.2 million tonnes.

The IGC is forecasting soy production in the US, the world's top exporter until 2010-11, at 83.2 million tonnes, up 0.4% from its previous forecast but 8.2% lower on year in the marketing year that began September 1. Soy output is falling even as demand rises, and the IGC forecast global trade in 2011-12 to rise 3.9% to 94.9 million tonnes, with Brazil expected to leapfrog the US as the top exporter for the first time.

China, which accounts for 60% of global imports, will likely ship in 57 million tonnes of soy in the marketing year that started October 1, up 8.8% on year.

The global soymeal trade may expand by 6%, to 60 million tonnes, on the back of strong demand in East Asia. South Korea may increase its imports by 25%, to two million tonnes, and Thailand by 13% to 2.7 million tonnes, the IGC said.

Meanwhile, global rapeseed output will likely be unchanged in 2011-12, just short of 60 million tonnes, as lower output in the EU will be offset by gains in Australia and Canada, it said, forecasting the global trade to rise by 500,000 tonnes, to 10.9 million tonnes.