May 30, 2012

 

IGC revise lower South American soy output estimates

 

 

The International Grains Council has further reduced its expectations for the South American soy harvest this year, the seventh time since September, reaching a projected on-year drop of 16%.

 

Based on the revised estimate, South America will produce 114.4 million tonnes of soy in the 2011-12 marketing year, which is based on aggregate crop and marketing years in producing countries.

 

The downward revision - by 23 million tonnes since its initial estimate in September and 1.5 million tonnes lower than its estimate last month - is due to severe drought and disease, the IGC said in a recent report.

 

South America is the world's top supplier of soy and soymeal from March through August, when the US harvest hits the market, and a 16% decline would place serious demand pressure on US inventories.

 

"With harvesting in South America largely complete, a better assessment of the impact of drought conditions on yields can now be made," IGC said.

 

Argentina is estimated to have produced 41 million tonnes of soy in 2011-12, 1.9 million tonnes lower than previously estimated, down 16% from 2010-11.

 

The IGC left its estimate for Brazil's soy crop unchanged at 65.6 million tonnes, which would be a decline of 13% from a record 75.3 million tonnes in 2010-11.

 

Brazil's soy exports of the previous crop have surged even as drought has afflicted its current crop. The IGC estimated that the South American' nation's exports in the marketing year ending Sept. 30, 2012, will total 35.7 million tonnes, up 19% on year.

 

Argentina's exports for the year are forecast at 8.2 million tonnes, down from 9.2 million tonnes in 2010-11.

 

The IGC is projecting that global soy output will fall by 30 million tonnes in 2011-12, while the global trade will fall by 2.3 million tonnes, indicating a significant depletion of inventories.

 

Despite a fall in global supply, total soy shipments to China, the world's top importer, will rise 6% to a record 55.5 million tonnes because of higher demand for animal feed and vegetable oils, according to the IGC.

 

Soymeal trade will rise by 500,000 tonnes to 57.4 million tonnes, the IGC said, without providing soy/soymeal inventory levels.

 

The European Union's soy imports are expected to fall 11% to a multiyear low of 11 million tonnes, while its soymeal imports will be unchanged at 22.4 million tonnes, it said.

 

The EU's soymeal imports are still relatively high, in line with the five-year average, as lower soy imports and tight supply of alternative oilseeds has underpinned demand, the IGC said.