El Nino to bring favourable rain to Brazil's soy farmers

El Nino should bring favourable rains to Brazil's southern soy growing states, raising the likelihood of a record breaking 2009-10 soy crop, according to soy specialists.

 

Brazil's southern states of Parana, the No. 2 soy producer, and Rio Grande do Sul, the No. 3 soy producer, suffered from a prolonged drought during the 2008-09 crop season. As a result, Parana in particular experienced hefty soy losses.

 

The upcoming 2009-10 crop, however, is expected to be a bumper crop of more than 60 million tonnes compared to 57.1 million tonnes from the 2008-09 crop, according to private consultancies such as Cerealpar, AgRural and Celeres. The 2008-09 has already been harvested.

 

Inclement weather could hamper the yield, but industry analysts expect this year that El Niño, a global weather phenomenon that usually warms temperatures in the Pacific, will favour farmers this year.

 

"El Nino traditionally brings wet weather to the south of Brazil and this should remove the threat of the drought that occurred for the 2008-09 crop," said Michael Cordonnier, president of Soy & Corn Advisor.

 

Cordonnier said that recent El Niño cycles resulted in good rains in southern Brazil and subsequently good yields as well.

 

He pegs Brazil's 2009-10 soy crop at between 61 million-62 million tonnes. This could rise further if soy prices continue an upward trend.

 

Celso Oliveira, a meteorologist at local weather service Somar, said Brazil's southern states should be helped by good rains.

 

"El Niño should bring double, triple or even more rain to the south of Brazil this year," Oliveira said.

 

In the south, farmers saw just a light sprinkle of 120 millimetres of rain last October and November. This left the ground hard and brittle. During a strong El Niño such as in 2002-03, he said the rainfall can rocket to 700 millimetres in the south.

 

Steve Cachia, a grains analyst at consultancy Cerealpar, said that traditionally the best soy yields have appeared with El Nino.

 

But Cachia warned El Nino can also bring shorter periods of rain to the northeast of Brazil. Bahia, although a relatively small producing state, could be hurt by the hotter, dry weather, he said.

 

Heavyweights such as Mato Grosso, the No. 1 soy producing state, should produce 17.9 million. Parana should deliver 9.5 million tonnes and Rio Grande do Sul 7.9 million tonnes in 2008-09, according to National Commodities Supply Corp. In comparison, Bahia should produce 2.4 million tonnes.

 

David Brew, a broker at Brasoja in Rio Grande do Sul, said the ground is still dry in Rio Grande do Sul state.

 

Even if El Niño brings heavy rains that can cause flooding, the rain should drain easily as the local fields aren't flat, unlike in parts of Argentina, he said.

 

Overall, the rain will bring more advantages than disadvantages, Brew said.

 

Brazil is the second-largest soy producer in the world after the US.