October 26, 2010
Brazil's drought sways China to US soy
Belated rains over Brazil's soy belt due to La Nina weather phenomenon may delay harvest for an extra month or more, forcing buyers such as China to rely on US soy into April.
"We are seeing China booking ships for the Gulf ports in March, April, May, which for the US is unusual," an agronomist said.
This may be behind US soy export sales hitting a two-month high last week, nearly doubling from the previous week amid heavy sales to China, the world's top importer of the oilseed, traders said.
China needs to buy at least one million tonnes on the global market every week to meet import projections.
Growers in Brazil have avoided selling beans deliverable in March, when new-crop beans from early harvest typically start flowing into ports.
There will be late supplies of soy to crushers and ports for the 2011 season, a US producer said, adding that it will be a slow start for the export season.
Delays in planting in the centre-west, especially Mato Grosso, helped drive Chicago soy futures to their highest prices in 14-months this week.
Mato Grasso is traditionally the first to start planting but La Nina has pushed back the arrival of widespread spring rains now roughly a month. Producers in the state are almost always the first to harvest but that seems less likely now.
Meanwhile, Brazilian roads and ports have suffered from decades of under-investment. Breakdowns or delays due to weather are not uncommon, and late grain harvest concentrated on a rickety transport system increases the risk of delivery problem.
Glauber Silveira, head of the soy producers association of Mato Grosso Aprosoja, said the soy crop could be planted in the state as late as November without loss to yields, but the harvest will be condensed which may create logistic problems.
"China can't take the risk of a hitch in deliveries from South America, or anything going wrong with logistics in Brazil and that kind of thing happens all the time," he added.
