January 27, 2012

 

Dry weather pulls down Brazil's soy output forecast

 

 

More early signs of the drought's impact on Brazil are showing as the country's second-biggest soy state cut its crop assessment for 2011/12 on Thursday (Jan 26).

 

Parana cut its crop view to 11.67 million tonnes from the previous projection of 12.73 million due to dry weather in November and December, the state's agriculture department said. That marked the second downgrade of the crop by the department, which had cut its outlook from 14.1 million tonnes earlier in January.

 

Parana has been one of the hardest hit of Brazil's southern grain belt states in this season's drought. It produced a record 15.4 million tonnes of soy in the previous harvest of 2010/11. Drought over the grain belts of Brazil and Argentina, the world's second- and third-largest suppliers of soy, has sent Chicago soy and corn futures prices surging in past weeks as markets weigh its impact on global food supplies.

 

The two countries account for about 50% of global soy supplies.

 

Parana, along with Brazil's southernmost soy-producing state Rio Grande do Sul, started the September-December planting season with regular rainfall, but conditions deteriorated in November and December and left fields parched under the hot, subtropical sun.

 

Parana's crop is further along in development and harvesting than No. 3 soy grower Rio Grande do Sul. Early harvest results in important producing regions have been showing signs of the damage caused by several weeks of dry weather. Rio Grande do Sul has shown no serious downgrades in its crop estimates, but it has not yet started harvesting.

 

Parana has had abundant rains this month that will help later-developing soy in the state. The agriculture department said only about 3% of the state's crop has been harvested and that recent rains have stopped the decline in the state's soy crop yields.

 

Independent grain analysts Celeres said on Monday that just over 14% of Parana's soy crop is a week or two away from harvest and in the final stages of maturation. The dry weather in November and December has caused some irreversible damage to the state's crop yields, analysts say.

 

The agriculture department also lowered its estimate of Parana's summer corn crop to six million tonnes from 6.4 million. Earlier in January, the state had expected 7.4 million tonnes of corn from the summer crop.

 

If confirmed, the currently forecast harvest would be equal to last year's summer corn outcome. Farmers invested heavily this year in seeds and fertilisers and planted 20% more area to the crop, enticed by the attractive price of the grain.

 

The department projects a record 9.6-million-tonne winter corn crop, which has started early planting as the summer crop is harvested. That would be an increase of 50% on last year's winter crop, which took a battering from frost. Winter corn area is seen up 10% on last year at 1.89 million hectares. Parana vies annually with center-west state Mato Grosso as Brazil's biggest grain crop producer.