December 17, 2009

 

Argentine soy harvest to exceed US estimates

 

 

Statisticians have raised the bar on estimates for Argentina's soy harvest to 57.2 million tonnes well above other forecasts in a report cutting price estimates for both the oilseed and wheat.

 

According to the Australian Bureau of Agricultural and Resource Economics (Abare), Argentina's soy crop will beat last year's by 60% thanks to a switch by farmers from growing grains.

 

"This switch has been driven by a longer planting window for soybeans relative to corn during the spring, and higher returns for soy," Abare said.

 

The figure compares with a 53.0-million-tonne estimate from the US Department of Agriculture (USDA) and a 48.0-million-tonne forecast from Oil World which has warned over the impact of dry weather on the crop.

 

Oil World restated its projection in a report earlier this week that soy prices were set to come under considerable pressure over the next three-to-six months assuming that even its forecast for Argentina's crop, and a 63.7-million-tonne harvest in Brazil, were realised.

 

Abare predicted that Rotterdam soy prices would average US$375 million in 2009-10, an US$18-a-tonne cut from its September estimate and down 10.9% on prices the year before.

 

The weakening estimate reflected an expected record global oilseed production, which will outweigh the effect of a modest increase in world consumption.

 

Total oilseed output would rise by 8.6% to 429 million tonnes, Abare said, lifting its production forecast, while leaving its consumption guess unchanged at 413 million tonnes, up 3.3% year on year.

 

The bureau also cut its forecast for the average wheat price in 2009-10 by US$11 to US$190 a tonne, citing stocks replenished by the second-biggest global harvest, following on from last year's record high.

 

However, Abare raised hopes for average corn prices - as represented by Gulf of Mexico shipments free on board - by US$5 a tonne to US$161 a tonne, noting weaker Chinese production and rising consumption by ethanol plants.

 

The bureau also cut hopes for Australia's agriculture exports by A$2 billion (US$1.78 billion) to A$30 billion (US$26.7 billion), citing its reduced wheat crop forecast and the impact of foreign exchange changes.

 

Due to a lower world price and an assumed higher Australian dollar, the value of wheat exports is forecast to fall by 15% to A$4.3 billion (US$3.84 million), Abare said in a quarterly commodities report.

 

Commercial grain and meat farms were set to report a loss averaging A$11,000 (US$9,824) in 2009-10, compared with a small profit a year before. Dairy farms would fall A$55,000 (US$49,111) into the red from a profit of A$7,900 (US$7,054) in 2008-09.