March 12, 2004

 

 

Drought Set To Cut Brazil's Rio Grande do Sul Soy Output By 27%

 

Brazil's number three soybean producing state Rio Grande do Sul will see output cut by as much as 27% to 7 million tones as a result of drought, the state federation of cooperatives FecoAgro said.

 

Its report - based on data from 35 cooperatives that account for three-quarters of the grain belt in Rio Grande do Sul - projected soy output would be down 2.6 million tonnes from the originally forecast 9.6 million tonnes.

 

This loss is considered irreversible, FecoAgro said in the report which was released late Wednesday.

 

On March 5, the state's crop supply agency Emater said Rio Grande do Sul's soy crop would fall 13 percent from last year to 8.34 million tonnes.

 

The FecoAgro report warned, "The tendency (is) for conditions to deteriorate if it does not rain in the next 10 days."

 

Light showers are forecast Thursday and Friday over the southernmost state, but the region should return to dry weather from the weekend until March 20.

 

Rainfall in Rio Grande do Sul has been well below average since January. In February, rainfall was 83 percent below historical averages, according to local forecasters Somar.

 

State soy yields were forecast at 1.77 tonnes a hectare compared with the 2.41 tonnes/ha average over the past three years in the state, FecoAgro said.

 

Drought will also hurt the state's corn crop, although not as severely as soy. Output was project to fall 18 percent to 3.99 million tonnes from last crop's 5.27 million.

 

Although it is still expected to reach record territory, Brazil's soy crop has been damaged by poor weather this season. The Agriculture Ministry recently lowered its forecast for the national crop to 57.7 million tonnes from 58.8 million.

 

Brazil put out 52 million tonnes last season.

 

While the southern soy belt, including Rio Grande do Sul and No. 2 soy state Parana, have been parched by drought in the past two months, the soy-rich center-west states have lost crop output due to excess rain and Asian soy rust fungus.

 

The losses to Brazil's soy crop, the world's second largest producer after the United States, helped drive soybean futures to a 15-1/2-year high recently on the Chicago Board of Trade.