August 22, 2008

 

 

The South American 2008-09 soy crop will see some minor expansion in October of nearly 4 percent, but not much more than that, according to preliminary estimates by regional soy consultancy Safras & Mercado.

 

"Even though everyone right now in the soy market is focused on the US crop, that attention will switch to South American by October and it doesn't look right now that this soy crop is going to be big enough to change the current supply and demand balance," said Flavio Franca of Safras & Mercado.

 

Of the four soy producer nations in South America, Safras expects Brazil to increase soy area by 2 percent to 21.8 million hectares. That could have Brazil harvesting around 62.2 million tonnes next March, above and beyond the 60-million-tonne record breaker set this past crop year.

 

Argentina, the second-largest soy producer in South America behind Brazil, is seen expanding by anywhere from 4 percent to 5 percent come November, when farmers there start to seed soy fields.

 

Argentina planted around 16.6 million hectares of soy in 2007-08 and harvested 47 million tonnes. Safras, which has offices in Argentina, expects the crop to come in closer to 49 million tonnes in 2008-09.

 

Paraguay, which borders Brazil and Argentina to the west, is also seen expanding by 4 percent to 5 percent over the 2.6 million hectares planted in 2007-08. If all goes well, that small South American nation could produce around 7.4 million tonnes of soy, above the 7 million tonnes produced last year.

 

By comparison, Brazil exports around 2-3 million tonnes of soy monthly.

 

Lastly, Bolivia is expected to maintain its soy area. The country produced around 1.1 million tonnes last year.

 

All told, South America could harvest 121 million to 122 million tonnes of soy in 2008-09, up from 116.6 million tonnes in 2007-08.

 

The world consumed 231 million tonnes of soy last year and is expected to consume around 238 million tonnes in 2008-09, Flavio said, citing USDA estimates.

 

Current world soy stocks are around 49 million tonnes, most of that in the hands of Brazil and Argentina farming and agribusiness operations at this time. Brazil in particular rarely has any carry-over stock, which means once it starts harvesting new-crop soy early next year, the 2007-08 soy supply will be close to one million tonnes.

 

"Even with a large US crop and a larger South American crop likely, we won't see any major changes to global soy stocks next year," Franca said.

 

South America is the largest soy-producing region in the world and soy is one of the Southern Cone Common Market, or Mercosur's leading commodity exports.

 

Soy futures on the CBOT rose 16.25 cents to US$13.10 per bushel for the September contract early Thursday.