July 30, 2012
IGC reduces expected US soy output by 9.5% for 2012-2013
International Grains Council has reduced its US soy output forecast for 2012-2013 by 9.5% to a five-year low of 79 million tonnes, as a severe drought continues to affect crops in the Midwest.
Production was estimated at 83.2 million tonnes in 2011-2012 and is projected to fall for the third successive year.
IGC also cautioned that there is potential for further reduction if the weather conditions do not improve soon.
With crops now entering their crucial pod-filling stage, persistent hot and dry weather across much of the Midwest has significantly impacted yield potential, IGC said in its monthly report.
Less than a third of the US soy crop is in good condition, IGC said citing official government reports.
IGC also lowered US soy exports forecast for 2012-2013 by 12% to 35.5 million tonnes. Brazil is likely to be world's top soy exporter, pushing US to the second place.
Brazil may get the top position this year as shipments are already up 40% on year during the October-June period.
IGC slashed US soy export forecast by 8% to 7 million tonnes.
Due to lesser US output, IGC also slashed global output forecast for 2012-2013 by 3% to 259 million tonnes. However, at these levels, global soy production will still be 9% higher on year, if weather turns favourable in South America after the recent drought.
Output is lower in the US at a time when demand is increasing and global trade is forecast to rise 4% to a record 94.7 million tonnes.
China, with more than 60% share in global trade, is driving up demand and imports, likely to rise 4% to a record 59 million tonnes.
Relatively strong economic growth, and an associated change in dietary patterns towards greater protein content, is giving a push to Chinese demand for animal feed and vegetable oils, IGC said.
Demand from countries such as China amid tight supply is pushing up prices. Near-month soy for August delivery on the Chicago Board of Trade hit a record high of US$17.7775 a bushel on July 20.
On the positive side, the surge in global prices will likely spur larger plantings in South America and coupled with a return to at least average yields, production in the region is expected to rebound, by at least one-fifth, to around 140 million tonnes in 2012-2013, IGC said.
Global soy trade is likely to change slightly on year around 57.5 million tonnes. Imports by the EU, world's top importer are forecast unchanged at 22.7 million tonnes but much lower than 2007-2008 record of 25.4 million tonnes.