June 21, 2012

South America's soy crop may reach highest level

Next season, Brazil and Argentina will likely sow record amounts of soy as prospects of better revenue spur farmers to switch fields to the oilseed, Oil World said.

Brazil, the world's largest soy grower and exporter after the US, may plant 26.4 million hectares (65.2 million acres) of the oilseed in the 2012-13 season, or 5.4% more than a year earlier, the Hamburg-based researcher said today in an e-mailed report. The country may cut its corn planting to 14.5 million hectares, 4.1% less than a year earlier.

In Argentina, the world's third-largest soy grower and exporter, farmers may plant 19.6 million hectares, up 5.8% from a year earlier. The country may produce a record 54.5 million to 55.5 million tonnes of soy.

Wheat planting may plunge by 22% to 3.6 million hectares, while the corn area rises by 2.8% to 5.1 million hectares.

"Farmers in South America are getting more enthusiastic about expanding soybean cultivation, taking advantage of the comparatively lower production costs, in relation to grains, and favorable price prospects," Oil World said. "Many of them have already started marketing their 2013 crops," even though harvesting won't begin for another seven to nine months, it said.

Soy prices have climbed 10% this year on the Chicago Board of Trade, while corn tumbled 20% and wheat was little changed. The oilseed rallied as dry weather in the past season hurt South American crops, while Chinese demand increased for US supplies.

Almost one million hectares of Argentina's 2011-12 soy crop still need to be harvested, while some regions of the country have experienced frost and snow, Oil World said. The country's output in the season may drop to 40 million tonnes, down from 49.2 million a year earlier.

Brazil's 2011-12 soy production was estimated at 65.8 million tonnes. Corn output at 67 million to 68 million tonnes will surpass the soy harvest "for the first time in recent history," Oil World said.

Argentina is the world's second-largest corn exporter, after the US, and Brazil ranks fourth, after Ukraine. Argentina is the biggest wheat shipper in South America.