November 10, 2011


Brazilian soy to overtake US



Ideal planting conditions has greatly helped Brazil and the country has the potential to overtake the US as the world's top soy exporter.


The USDA cut by 1.4 million tonnes (50 million bushels) to 36.1 million tonnes its forecast for domestic shipments in 2011-12, citing a "slow export sales pace through October".


The downgrade contrasted with enhanced prospects for Brazilian exports, which were pegged at a record 38 million tonnes, 1.5 million tonnes higher than previously forecast.


Brazil has only once beaten the US in exports, six years ago, and then by a modest 330,000 tonnes.


The Brazilian upgrade reflected "beneficial early seasonal rainfall" which has made "planting conditions nearly ideal" throughout the country, USDA analyst Curt Reynolds said.


"Planting progress in Mato Grosso, the top producing state is more than 60% complete and more than 20% ahead of the five-year average."


Farmers have improved yield prospects further by making "high investments in inputs", a factor reflected in a series of results from seed and fertilizer groups.


The USDA lifted its estimate for Brazil's soybean harvest by 1.5 million tonnes to 75 million tonnes.


However, the forecast for US production was trimmed by 390,000 tonnes (14 million bushels) to 82.9 million tonnes, (3.046 billion bushels) in line with a lower yield estimate, largely reflecting poor weather in Mississippi, "where excessive rain during October hindered yield expectations".


And while weaker output can hold the compensation for farmers of higher values, with buyers having to compete harder for supplies, this time the USDA cut its forecast for farmgate prices too, for a second month.

At US$11.60-13.60 a bushel, growers will receive US$0.55 less a bushel for this year's harvest than forecast last month.


And, indeed, the data were perceived a bearish for futures prices too by many commentators.


"The relaxation of the American balance, even if it was expected by some analysts could weigh on prices in Chicago," Paris-based Offre & Demande Agricole said.


January soy futures stood 1.1% lower at US$11.92 a bushel in late morning deals in Chicago.


At mid-range levels, farmgate soy prices would come in at just 1.9 times higher than those for corn, on USDA estimates, compared with 2.2 times last season and 2.7 times the season before.


The ratio of corn to soy prices on futures markets is seen as a key signal of which crop growers will prefer in spring sowing schedules.

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