October 10, 2007

Drought and dryness may curtail expectations for Brazilian soy crop

Oil World's Brazilian soy crop estimate of 62.3 million tonnes for early 2008 (up 3.0 million tonnes) may be revised due to critical weather and planting conditions, the company said.

The Hamburg-based analyst said plantings had been delayed and a large share of early sown soy must be replanted due to severe dryness and unusually long periods of drought.

With conditions critical in many important production areas in Brazil, it is likely that any improvement in US soy production prospects will be offset by a reduction in Brazil, the analyst said. US soy production is expected to be lesser next year as more supplies were expected to be diverted to ethanol. Brazil and the other Latin American countries were expected to take up the slack in production.

Dryness in Brazil was forecast to continue until Oct 20, though some initial rains had arrived in parts of Mato Grosso and Goias at the start of the month.

The outlook for the US soy crop is improving due to better than expected harvest progress. Higher than expected yields obtained so far have raised expectations that the US soy crop would exceed USDA estimates, Oil World said.