March 10, 2010

Rains prompt Brazil to lift soy estimates again

Brazil has, once again, raised the bar for estimates of its soy crop, saying it will now beat last's year harvest by more than 10 million tonnes.

Conab, Brazil's crop supply agency, raised its estimate for 2009-10 production by 840,000 tonnes to 67.57 million tonnes.

The revision, from an organisation noted for conservative estimates, reflected positive results from the harvest, which is about one-third complete, as well as benign weather.

The agency also added 20,000 tonnes to its forecast for Brazil's corn output, taking it to 51.38 million tonnes.

The soy revision follows something of a fall-off over the last month in the pace of upgrades to Brazil soy production estimates, as rains in some parts, notably the north western state of Mato Grosso, reached levels which looked likely to damage crops.

Abiove, the association of Brazilian vegetable oil processors, last week noted the high rainfall in pegging the crop at 65.5 million tonnes.

However, higher production is not necessarily being translated into better profits for farmers, who are receiving lower prices for soy, in part because of the strength of the Brazilian real, but seeing many costs rise.

Many farmers in Matto Grosso have made three or four fungicide applications this season, compared with one or two in a typical year, to control disease encouraged by heavy rains.

Meanwhile, the USDA, which currently forecasts Brazilian soy output at 66.0 million tonnes, will reveal fresh estimates for global crop supply and demand on Wednesday.