February 13, 2008

  

Brazilian traders say government underestimated soy crop
 

 

Brazilian traders and analysts still think the government's 2007-08 estimate of a 58.5 million tonne soy harvest is too low, and say they expect a harvest of around 60 million tonnes.

 

Conab's February forecast, released Tuesday, was on par with its January estimate of 58.5 million tonnes, and not much higher than the 2006-07 year-end production totals.

 

Although the estimate is lower than market expectations, it is unlikely to impact market prices, analysts said.

 

According to Steve Cachia, a soy market analyst at Cerealpar, unless there is an unexpected change in weather or crop conditions, Conab's predication is too low.

 

"We expect 60 million tonnes because farmers are getting better yields than expected," Cachia said.

 

Even if there are losses in the soy crop, the higher yields should compensate, he said while visiting farms in the southern state of Parana.

 

Other Brazilian agricultural consultancies are also forecasting record-breaking soy harvests in 2007-08 above the Conab estimates.

 

Farm consultancy AgRural recently estimated that Brazil should produce 62.2 million tonnes of soy.

 

Conab said Mato Grosso, Brazil's No. 1 soy-growing state, expects 16.5 million metric tonnes of soy in 2007-08 a 1.2-million tonne increase from 2006-07.

 

The second-largest soy-producing state, Parana, expects to produce 11.8 million tonnes in 2007-08, a 100,000-tonne drop from 2006-07.

 

Despite the delay in rains, there is sufficient rainfall in the main soy-producing areas to enable the crop to develop normally, according to Conab.

 

Paulo Gilioli, a broker at Cerealpar, agreed that the soy harvest and climate are good, with sufficient rain for the crop in Mato Grosso state.

 

David Brew, a broker at Brasoja in Rio Grande do Sul, said that that the soy crop in Rio Grande do Sul, the No. 3 soy-producing state, is also doing well.

 

With the soy market in Chicago no longer going up, the market in Brazil has also cooled off, with people stopping their selling and are waiting for better prices, he added.

 

A weaker dollar is also keeping farmers from the market.

 

Soy prices on the Chicago Board of Trade were trading at around US$13.20 per bushel for the March contract.

 

However, Paulo Gilioli, a broker at Cerealpar, said interest is rising in contracts for March and February, he said.