August 8, 2012
Due to poor harvests and brisk exports, South American soy stocks have dropped by about a third against this time in 2011, shifting global soy demand to the US at a time of concern the US crop will also fall.
"At the beginning of August, combined soy stocks in Argentina, Brazil, Paraguay and Uruguay had plummeted to only an estimated 45.4 million tonnes, a staggering 22.5 million tonnes or one-third below a year earlier," Oil World said.
"Soy crushers are reportedly facing increasing difficulties in acquiring soy considering that a large portion of the physically available stocks is already committed."
The US is the world's largest soy exporter, followed in second place by Brazil, then by Argentina and Paraguay. Drought cut soy harvests in South America this year while another drought and heat wave is also threatening the US crop.
Oil World estimates Brazil's August 1 soy stocks fell to 20.80 million tonnes from 33.15 million tonnes on August 1, 2011. It believes Argentina's stocks fell to 22.66 million tonnes from 30.62 million tonnes and Paraguay's to 1.75 million tonnes from 3.88 million tonnes. Instead of meeting global soy demand, Brazil may have been importing soy itself recently, it said.
"There was talk recently that Brazilian crushers are considering purchasing soy from neighbouring countries," Oil World said. "An estimated 0.2 million tonnes was apparently purchased from Bolivia, but we consider it unlikely that any noticeable quantity will be imported from Argentina and/or Paraguay where soy supplies are currently unusually tight too."
Brazilian and Argentine soy exports were above expectations in June and July, it said. But they will have to drop in the remaining months of the year as supplies dwindle.
The "prospective sharp decline in South American exports is boosting foreign demand for US origin to levels the US is unlikely to satisfy, owing to the recent significant soy crop deterioration," Oil World added.
This is a major reason why soy prices reached all-time highs in July, it said.
