October 26, 2011

South American soy production to be better than expected 

South American soy production in early 2012 may be larger than previously expected, Hamburg-based oilseeds analysts Oil World said on Tuesday (Oct 25).

"South American soy production may exceed expectations in early 2012," Oil World said. "Planting and growing conditions improved significantly in the last 2-3 weeks after the required rainfall had arrived in most major soy growing areas."

Global soy supplies are currently sufficient to cover demand, but only by reducing stocks which in turn will raise world dependence on South American harvests in early 2012, Oil World said. There has been recent concern about dryness in Brazil, the world's second largest soy producer.

The La Nina weather pattern still means there is a rising risk of dryness in south Brazil between November and January, Oil World said.

"Brazilian farmers made good profits in 2010/11 and are well positioned to enhance the yield potential by maximising the usage of production inputs," it said. Such inputs include fertiliser and insecticides.

However, Argentine farmers are turning to grain sowings because of high prices, making the country's soy crop outlook less clear, it said.

"Larger-than-expected grain plantings are likely to curb the growth in Argentine oilseed plantings to only 0.4-0.5 million hectares or about half the average annual increase registered during the past 10 years," it said.

Oil World currently forecasts Argentine farmers will expand soy plantings for the 2012 crop to 19.10 million hectares from 18.80 million hectares in the 2011 crop although it stressed Argentine plantings are running behind schedule.