October 6, 2010

Brazil farmers rush to sell 2011 soy forward

Soy farmers in Brazil may be behind in sowings their crop but are well ahead in selling it, with growers in the major producing state of Mato Grosso having already more than one-third of the next harvest.

Firm soy prices have encouraged producers to sell an average of 18% of their expected crop ahead, nearly twice the rate of last year, according to analysts.

In Mato Grosso, which produces nearly 30% of the crop in the worlds' second biggest producer of the oilseed, the rate of forward sales against a harvest which will not take place until early next year has reached 36%, 14 points more than a year ago, the state's Institute for Agricultural Economics said.

The sales had been spurred by the rise in Chicago futures above US$11 a bushel, the USDA's Brasilia bureau said. Chicago's early-2011 lots spent much of the last 10 days of September above US$11 a bushel, although they have fallen back since.

The ease of selling soy is one reason for the increased popularity of the crop compared with corn, where the government sets minimum prices through a burdensome auction process, analysts said.

The bureau lifted to a record 24.0 million hectares its forecast for Brazil's soy sowings, reflecting a switch from corn, and despite the late onset of seasonal rains, which has delayed the start of plantings by three weeks, on estimates from analysis group Oil World.

However, the groups differ over their estimates for the crop's potential, with Celeres seeing it as on course to hit 69.1 million tonnes, narrowly beating last year's record, while AgraFNP and the USDA staff make a bigger allowance for the potential for the La Nina weather patter to further disrupt rainfall patterns.

La Nina, associated with cooler Pacific water temperatures, tends to create drier-than-usual conditions in Brazil.

Separately, Oil World lifted its hope for Argentina's soy output this year from 51 million tonnes to 52-53 million tonnes, citing improved weather. Sowings were expected to fall by 300,000 hectares to 18.5 million hectares, a smaller drop than earlier appeared likely.