May 31, 2011

Soy prospects for Brazil and Argentina improve in 2011

Soy prospects in Brazil and Argentina, the second and third-biggest exporters of the oilseed behind the US, have improved, researcher Oil World said in a report on Tuesday (May 31).

Growers in Brazil will produce 73 million tonnes of soy, up from a record of 68.7 million tonnes a year ago, and farmers in Argentina will harvest 49.5 million tonnes, up 1% from a prior estimate.

World consumption of soy is expected by the USDA to jump 7.5% to 255.8 million tonnes in the year through August 31.

In Argentina, soy production prospects have improved, primarily in Chaco and in the northern regions where initial harvesting has been made, the researcher said. In Brazil, soy production has turned out higher than expected and probably surpassed last year's record.

Farmers in Argentina have been reluctant to sell soy, Oil World said. Only 2% of the crop sold in March, down from 4% a year earlier, and 5% sold in April, compared with 10% in 2010, according to the report. Farmers had sold only a fourth of this year's soy crop, a six-year low, selling corn and wheat first, the researcher said.

Growers also may be hoping for higher prices as planting delays in North America contribute to higher prices, according to the report. Political doubt in Argentina, which has national elections on October 23, may also be curbing selling by farmers, speculates Oil World.

Argentine export sales in the country totalled 800,000 tonnes in April, down from 2.3 million tonnes a year ago, and will also be down "sharply" from last year in May according to shipment nominations, Oil World said. Exports will total about two million tonnes in May, down from 2.62 million a year earlier, according to the report.

Farmers in the Commonwealth of Independent States will expand production of the oilseed, Oil World anticipates. Output in the region, which includes Russia, Ukraine, and Kazakhstan, will be 3.54 million tonnes, up 14% from 2010, according to the report. The Ukraine crop may be 1.9 million tonnes, the most-ever, and exports may reach a record 1.1 million tonnes, Oil World said.

"Soy has enjoyed increasing attractiveness among farmers in several regions owing to improved yields and favourable returns per hectare," the researcher said. "Ukraine is likely to harvest a record soy crop, which may boost soy exports to a record".

Good soy crop prospects in Brazil and Argentina could total 123 million tonnes.