September 25, 2007

More rains to boost Paraguay's soy output in 2008

Paraguay, South America's third- largest soy exporter, may next year gather as much as 12 percent more of the oilseed as rains moistened dry soils, an industry group said.

Production may increase to as much as 6.5 million tonnes in the year to October 2008 from an estimated 5.8 million this year, Sonia Tomassone, chief executive of the Paraguayan Oilseed Crushers Association.

The projection comes as dwindling world supplies have driven up soy 79 percent in the past year in Chicago. World soy output in the crop year that begins Oct. 1 will be 221.3 million tonnes, down from a record 236.1 million produced last year, the USDA said on Sept. 12. Inventories next year will fall to 50.4 million tonnes from a record 63.1 million this year, USDA said.

"Every bushel is going to count in a year like this,'' Thomas Mielke, a director at OilWorld, an industry consultant, said in an interview yesterday at the conference. "If anything goes wrong with the South American crop, supplies will be very tight. Global deficit in the major oilseeds is unprecedented.''

Mielke, who uses a different crop year, raised his forecast for the Paraguayan crop to 6.6 million tonnes for the year ending August 2008, from 6.5 million tonnes this year, and more than the July 13 estimate of 6.4 million tonnes.

World production of soy in the year to August 2008 may drop to 223.55 million tonnes, from 237.66 million tonnes this year, while demand may rise 5.4 percent to 239.15 million tonnes. Rising demand and inadequate supplies may cut reserves to a three-year low of 55.4 million tonnes from 71 million tonnes this year, he said.

Paraguayan soy farmers plant three crops: the first is sown this month and harvested in December harvest, followed by the main crop in October for harvest in February, and the late crop in November or December for harvest in May, Tomassone said.

The increase in production will not be from an expansion but better yields with better conditions, she said.

Soy futures for November delivery dropped 0.2 percent to US$9.7750 a bushel on the Chicago Board of Trade in after-hours trading in Asia. The price is up 29 percent this month after US farmers said they would plant the fewest acres in 12 years.

Soy, crushed for animal feed and oil for food and fuel, are Paraguay's largest export earner.