March 9, 2011

 

South American soy exports affected by rainfall

 

 

South American soy shipments for the month of February were lower than expected and will remain lower than usual in March as heavy rainfall delays harvests and transportation to ports, Oil World said in a report.

 

Brazilian exports dropped 66% from February 2010 to 225,000 tonnes as rain delayed harvesting and resulted in muddied roads, making transportation difficult, Oil World said. Software problems which hampered unloading at the port of Paranagua caused a 25-kilometre (16 mile) line of trucks on March 1, the company said. 

 

"South American soy exports turned out sharply smaller than expected and they will remain at a depressed level also in March, at least in the first half," Oil World said. "This is due primarily to the delays in harvesting and inland transportation in Brazil and Paraguay."

 

Brazilian soy processing into oil and meal was below the expected range in February, which caused a reduction in soymeal exports to 570,000 tonnes, significantly less than forecasted, Oil World said. Soy-oil exports of 130,000 tonnes were above expectations, the company said.

 

Brazil's soy harvest is facing severe delays and dry weather in Argentina may be damaging plants, cutting crop prospects in the countries, Oil World said.

 

Soy futures have increased by 7% since February 23 after hitting a two-month low due to extremely poor weather in South America. Reduced production in Brazil and Argentina, the second- and third-largest exporters of soy, may increase demand for US inventories, according to the report. 

 

"The problems in South America may shift some of the new demand to US origin, further tightening the US soybean balance," Oil World said. "Current weather forecasts indicate relief neither for the wet areas of Brazil and Paraguay nor for the dry areas of Argentina."

 

Heavy rain is forecasted in Brazil's Mato Grosso and a few other states in the next fortnight, which could further delay harvesting and result in mature pods opening in fields, Oil World said. Dry weather in Argentina may adversely affect development of soy that was planted later in parts of Cordoba, La Pampa and Buenos Aires, the company said.

 

A strike by Argentine dockworkers on March 4 and uncertainty about the dissolution of the agricultural exports agency, Oncca, are also part of buyers' concerns, Oil World said.

 

"Dock workers at Terminal 6 are demanding a doubling of their wages," Oil World said. "There is the risk that this conflict also spills over to the other terminals and that exports are interrupted or delayed unless the conflict is solved soon."