January 10, 2013
Argentina's soy reserves needed to compensate for potential US supply bottlenecks cause by low Mississippi River levels are insufficient, putting the attention on Brazil, where harvesting has already begun.
US barge shippers have worried over recent days about slowdowns on the drought-reduced Mississippi River. Traders look toward the Southern Cone when logistical problems crop up in the US, which is the world's No. one soy exporter.
But with less than one million tonnes of beans in reserve, Argentina will mostly stay out of the supply chain until the country's 2012-13 crop starts getting harvested in March, said local market experts and a trader at a major export company.
Brazil is also running low on 2011-12 soy. But some harvesting of the 2012-13 crop has begun with the bulk of the crop expected to be brought in February, a good month ahead of Argentina.
"Argentina had a major drought that reduced its 2011-12 crop and the new harvest will not start for another two months," said the Buenos Aires-based trader, who asked not to be named. "The Argentine crushing industry is operating at 60% capacity, so I don't expect the Mississippi situation to have an effect on what we do," he said.
So the onus for meeting the South American supply is falling on No. two world soy exporter Brazil, the trader and other market sources said.
Argentina, the world's top exporter of soyoil and meal and its No. three supplier of soy, has 0.9 million tonnes of beans left from the 2011-12 season, according to the Rosario grains exchange.
"Beans are running low and the farmers who have reserves are not seeing prices attractive enough for them to sell what they have left," said Patricia Bergero, an analyst at the exchange.
Soy futures were pushed down on Wednesday (Jan 2) by forecasts of a record-busting Brazilian crop. The country will produce 82.7 million tonnes of soy in early 2013, government agency Conab said, raising its forecast from the 82.6 million tonnes it estimated in December and well above the 66.5 million tonnes harvested last season.
Brazil exported just 135,000 tonnes of soy in December due to the weak 2011-12 crop, compared with 1.47 million from December of 2011. The USDA on Friday (Jan 4) is also expected to raise its forecast of Brazil's soy harvest by 0.9% from last month to 81.8 million tonnes, according to a Reuters poll.