March 2, 2012

 

Brazil risks 25% loss in southern soy areas

 

 

The USDA may revise down its official estimate for Brazilian soy output, warning of possible loss of 25% of the country's southern soy areas due to major dryness. 

USDA attaches cut to 70 million tonnes their forecast for Brazil's ongoing soy harvest, the world's second biggest after America's, thanks to the dearth of rainfall over the last thee months in southern areas.

 

"Significant drought conditions throughout December reduced soy production in the South region, and south east region of Mato Grosso do Sul, by an estimated 25%, or approximately six million tonnes from initial projections," the attaches, based in Brasilia, said.

 

It would also mean a drop of more than five million tonnes on last season's harvest a record decline in volume terms and, at 7.0%, the biggest in percentage terms in 20 years.

 

Some 115,000 hectares of soy, mainly in Rio Grande do Sul state, were being considered "a total loss".

 

These production losses will not be compensated by favourable yields being achieved in some areas of the centre-west and north east regions of Brazil," the attaches said.

 

The La Nina weather pattern blamed for dryness in southern Brazil is also seen as responsible for heavier-than-normal rains in central areas, boosting yields, if at the cost of extra disease threats.

 

In the central states of Goias and Mato Grosso, "wet growing conditions have required vigilant preventative fungicide sprayings against Asian Rust pressures".

 

The comments come ahead of the USDA's next monthly Wasde crop report, due on Friday March 9 - briefings whose data are taken as world benchmarks by farm investors.

 

Data from USDA foreign bureaux are seen as having a large influence on official USDA data.

 

While the attached forecasts failed to lift Chicago soy futures, with many investors having already factored in a downgrade in the next Wasde, prices revived in later deals.

 

"There is a lot of buying on any dips in the face of the negative news," Darrell Holaday at broker country futures said, adding that "some of the buying is technical".

 

Chicago's best-traded May soy lot closed up 0.2% at US$13:16 a bushel, its ninth successive day of gains.

 

Broker Allendale late on Thursday forecast the Wasde figure coming in at 70 million tonnes, a cut of two million tonnes, foreseeing a similar drop in the estimate for the Argentine harvest too, to 46 million tonnes.

 

Separately, Cristina Fernandez, the Argentine president, forecast the domestic crop at 48 million tonnes.

 

Many other commentators have revealed downbeat ideas over Brazil's harvest. Last week, Agroconsult estimated the harvest at 69.9 million tonnes, with rival consultancy Agrural pegging it at 68 million tonnes.

 

Conab, the official Brazilian crop buruea, last month came in with a 69.2m-tonne figure.