October 8, 2010

 

Brazil's new soy crop limited by dry weather

Brazil's 2010/11 soy crop was estimated between 67.6 million and 68.9 million tonnes, against the record 68.7 million tonnes harvested last season, with drought weather remaining a real threat, the government's crop supply agency Conab said Thursday (Oct 7).

 

The agency said planted area for soy would grow by between 1.3% and 3.1% this year to 23.8 million to 24.2 million hectares.

 

The forecast for rising area against slight falling output this season is a result of expectations of weaker yields due to less-than-optimal weather.

 

Last season had near perfect rainfall over the grain belt, which produced record yields of 2.93 tonnes of soy per hectare. Conab is forecasting this season to have more modest yields of 2.85 tonnes per hectare.

 

The La Nina weather phenomenon tends to bring drier weather to Brazil's grain belt. Regular widespread rains over the soy-rich centre-west region are about a month over due and no new rain is expected over the next 10 days.

 

Very few producers in Brazil's main soy producing state of Mato Grosso, which is in the centre-west, have begun planting due to the absence of regular spring rains. Last year, producers in the state were planting in mid-September.

 

No.2 soy state Parana and No.5 Mato Grosso do Sul and others have begun planting after abundant rains have created good conditions for sowing.

 

It is unclear yet how much the delayed arrival of rains in the centre-west will affect output of the new soy crop. Producers will still plant once spring rains return, which meteorologists expect in late October to early November.

 

But Brazil will not have new crop flowing into the ports until February or later. Mato Grosso, often the first state to harvest, will be harvesting in December.

 

The country's total corn output for the season would fall to between 51.8 million and 52.4 million tonnes, from the 56 million tonnes harvested last season, Conab said. Corn competes directly with soy for the same fields.

 

The large local poultry and pork industries consume about 80%-90% of the annual corn output, but Brazil has become an exporter in the past few years, shipping around eight million to 10 million tonnes abroad.

 

The 2010 wheat crop was forecast at 5.44 million tonnes, up from last year's five million tonnes. Brazil is often one of the top wheat importers in the world, buying from abroad about 40%-50% of its annual domestic consumption of 10 million tonnes.

 

Argentina accounts for much of Brazil's foreign wheat imports due to the Mercosur trade agreement that exempts the trade in grain between the member countries of a 10% common import tariff.