July 17, 2007

 

South American producers to export more soy as US production drops

 

 

A drop in soy acreage in the US has meant 120 million bushels of soy lesser, reducing 2007's production to 2.625 billion bushels.

 

This has also raised the forecast of the national average farm price this month to US$7.25-US$8.25 per bushel. Higher prices are expected to cut US soy exports in 2007/08 to 1.02 billion bushels from the June forecast of 1.08 billion.

 

Meanwhile, producers such as Brazil, Argentina, and Paraguay have finished their harvests and all have abundant stocks to sell at present.

 

Moreover, South American farmers have fewer incentives and storage facilities to hold on to production and may push for more exports due to current strong prices.

 

Experts predicted that deliveries of South American soy to the export market should strengthen considerably into early 2008.

 

In Brazil, strengthening exchange rates will also encourage soy farmers to sell. Brazil's soy exports for 2007/08 is expected to be 21 percent higher than the 2006/07 forecast.

 

For Argentina, the estimate of 2006/07 soy production was raised this month to a record 47.2 million tonnes from 46.5 million. By October, only 23 million tonnes is expected to remain.

 

Argentine soy exports are forecast to rise to 8.0 million tonnes for 2006/07 and 10.2 million for 2007/08. More exports are expected due to power restrictions faced by its soy processors.

 

Nevertheless, crushing could climb nearly 14 percent for the entire year to 38.5 million tonnes.

 

The expected tightening of soy stocks in the United States, Brazil, and Argentina brings the projection of 2007/08 global ending stocks down to a 3-year low of 51.9 million tonnes.

 

While soymeal supply is expected to be stable, soyoil stocks could continue to tighten in 2007/08, with demand likely to outpace production. Soyoil prices next year are expected to rise much more strongly than soymeal, experts said.