March 12, 2012

 

 

In the past three months, Brazil's big soy crop withered by 9% and Argentina's crop by 11% due to drought, the US government said Friday (Mar 9), more than traders had expected.

 

The smaller crops in Brazil and Argentina, which combined grow nearly half of the soy in the world, means slightly smaller but still ample global stocks, the USDA said in its monthly assessment of crops worldwide.

 

Soy futures prices rose early on the news, rising US$0.14 to US$13.46 a bushel at the Chicago Board of Trade. Corn was up 2% to US$6.58-1/2 a bushel and wheat was up 2% to US$6.42 a bushel.

 

"It wouldn't surprise me if we lower the bean crop once again in South America," said Mark Schultz, chief analyst for Northstar Commodities.

 

Analyst Anne Frick of Jefferies Bache said she believed South American crops "are still lower than USDA indicated today."

 

Despite what some called the crop carnage in Latin America, USDA left its estimates unchanged for US corn and soy ending stocks. Traders had expected some reductions in belief US sales would rise to make up for the shortfall in South America.

 

USDA estimated Brazil's soy crop at 68.5 million tonnes, down 5% from February and down 9% since December. Traders had expected a crop of 69.4 million tonnes.

 

Argentina was forecast for 46.5 million tonnes, down 3% from February and down 11% overall. Traders had expected a crop of 46.8 million tonnes.

 

Paraguay's crop was also hit hard, slashed 34% from earlier expectations, said USDA.

 

Rainfall was at a 25-year low in Paraguay from November through February while drought hurt Brazil's southern states and hot, dry weather hit the crop in north eastern Argentina.

 

"US soy exports are unchanged at 1.275 billion bushels as reduced supplies in South America raise prices, reducing global imports," said USDA. The US is the No. one soy grower and No. two exporter.

 

China, which buys more than half of the soy on the world market, was forecast to import 55 million tonnes this marketing year, down 1.5 million tonnes since January. USDA's forecast of the world soy crop is down by 5% since December, which has tightened supplies.

 

USDA raised its forecast for Brazil corn by one million tonnes, on larger expected area for the "second" crop planted after soy, and held steady at 22 million tonnes of corn in Argentina. Traders had expected reductions in both countries.

 

Larger exports will reduce US wheat stocks to 825 million bushels, but it was 1% larger than traders expected. At the end of March, USDA will estimate US plantings, based on a survey of growers, and list the size of US stock piles.

 

Traders say both will be significant in shaping expectations for market prices and the size of the new crop. Farmers are projected to plant the largest corn area since World War Two.

 

Informa Economics, a private consultant, raised its forecasts of US corn plantings to 95.5 million acres from 94.8 million acres and soy to 75.13 million acres from 74.6 million acres.

 

USDA has projected 94 million acres of corn and 75 million acres of soy. The corn crop could be well above 14 billion bushels, a record, under either planting total.