December 10, 2010

 

Brazil's 2011 soy, corn output to drop on bad weather

 

 

Brazilian soy and corn output for the 2010-11 marketing season is set to plunge amid adverse weather conditions, the Brazilian crop supply agency Conab said Thursday (Dec 9).

 

The disruptive La Nina weather conditions have been causing drier-than-expected surroundings in the south and southeast regions of the country.

 

According to Conab, the state of Rio Grande do Sul – in southern Brazil – is registering 30% less rain than average.

 

Soy production in the world's second largest producer is set to decrease slightly to 68.55 million tonnes from 68.68 million tonnes a year earlier.

 

Due to high international prices for soy and increased demand from China, Conab said that about 33% of the total production for 2010-11 had already been sold.

 

The Brazilian soy planting period usually runs from October to December.

 

The reduced soy production in Brazil is being closely watched by traders of biodiesel, as soyoil is a feedstock for the production of the green fuel.

 

Overall corn production in the country is set to fall by approximately 8% on-year to 52.559 million tonnes, as yields are forecast to decrease 4% to 4.144 kg a hectare.

 

The so-called first harvest of corn, a crop planted from late September through early November, is set to suffer a steeper fall, with estimates for this harvest falling to 31.347 million tonnes from 34.079 million tonnes a year earlier.

 

The second corn crop, which is planted in December and January, is set to come in at 12.212 million tonnes, down from 21.888 million tonnes.

 

The agency also said that due to high international corn prices, the market remains heated, with Brazil on track to export 10 million tonnes of corn in 2010-11, the second highest export figure ever.

 

Corn prices are currently being watched by ethanol traders, especially in the US, where corn is used as the main feedstock.

 

In contrast to falling production estimates for soy and corn, wheat production is forecast to rise 15% on-year to 5.778 million tonnes.

 

The increased production was attributed to a 30% increase in yields to 2.692 kg/ha. The wheat harvest also benefited from an earlier planting period in which the weather conditions were still favourable.

 

The Brazilian wheat planting period is in May and June.

 

Wheat prices have been in focus, as dry conditions in Europe and Russia have slashed production estimates and led Russia to ban wheat exports.

 

Wheat prices are especially relevant for European ethanol producers, who use it as a feedstock for ethanol production.