March 8, 2005

 

Drought reduces forecast of soybean crop in Brazil

 

 

Due to drought conditions in Brazil's southern region, which is the world's second largest producer of soybeans, the forecast for soy harvest has been reduced for the year.

 

Brazil government's crop forecasting agency stated that for year 2004-05 soybean output may fall 7 per cent short of the 61.4 million tonnes forecast made in December due to lack of rain in Rio Grande do Sul state.

 

''We run the risk of not having a record harvest this year,'' Silvio Isoldo, the agency's director for development said at a news conference in Brasilia. "The drought may continue.''

 

The prospect of drought hurting soybean harvests in Brazil and Argentina, the world's third-largest producer, helped drive prices up almost 25 per cent from a 31-month low on Feb. 4. Today, soy prices in Chicago fell the most in seven weeks on speculation that rains in Argentina will ease a five-week drought.

 

"The crop is a disaster," Carlos Sperotto, a soybean grower and vice president of the National Agriculture Confederation in Rio Grande do Sul, said in a telephone interview from Porto Alegre. "The damage is worsening day by day."

 

Insufficient rain since December led Rio Grande do Sul, Brazil's third-largest soybean-growing state, to lose 70 per cent of the forecasted 10 million tonnes of soybean harvest, Sperotto said. The government expects the state to produce 5.56 million tonnes of soybeans, the same amount produced in the previous crop.

 

"In spite of the smaller harvest, farmers will be able to deliver on their supply contracts," said Jacinto Ferreira, the agency's president in the news conference. "Farmers in the South will be able to get soy from Northern states to keep their obligations."

 

Brazil's total grain and oil seed harvest, including soybeans, corn, wheat and rice may rise to 123.4 million tonnes this year from 119.2 million tonnes last year, the statement said.

 

Brazil's record soy crop was harvested in 2002-2003, yielding 52 million tonnes. Even with the current drought, the government expects to set a new record of 57 million tonnes.

 

The government finances 30 per cent of Rio Grande do Sul's harvest, while suppliers finance another 55 per cent, Sperotto said.

 

Farmers are holding talks with suppliers and will meet Agriculture Minister Roberto Rodrigues this week to negotiate over their losses, Sperotto said.