August 17, 2011

Argentine, Brazilian soy harvest to be affected by La Nina

Approaching La Nina weather pattern could decrease rainfall during crop development periods, thus, affecting Argentine and Brazilian soy harvest in early 2012, according to Hamburg-based oilseeds analysts Oil World on Tuesday (Aug 16).

"Global supply problems may be compounded by a decline in South American soy production in early 2012," Oil World said. "There are indications that La Nina is developing in the October/December quarter, probably creating dryness and crop stress, mainly in central Argentina and southern Brazil."

La Nina is a climatic phenomenon which disrupts normal weather patterns.

"Central Brazil has experienced unusually dry conditions since mid-April," Oil World said. "If the current severe soil moisture deficits are not replenished by widespread rainfall, timely plantings and proper germination of grain and oilseed crops will be jeopardised in Mato Grosso and probably also in Mato Grosso do Sul and Goias."

Argentine oilseed and grain crops could be threatened by any La Nina from November or December 2011 onward, it said.

Meanwhile, there will also be intensified competition for planted area in South America between soybeans and highly-priced corn and wheat, it said.

"South America has grown in importance as an exporter of soy, soyoil and meal, satisfying a growing share of world import requirements because US export supplies have been insufficient," Oil World said.

"Although larger than expected soybean stocks will be available worldwide at the end of August 2011, the prospects for a decline in world soy production in 2011/12 will tighten supplies, raising prices of soy, oil and meal well above the levels expected up to now."