November 23, 2010

Brazilian soy and corn farmers may face drought again
 

Soy and corn farmers in Brazil may encounter a drought similar to the 2005 drought that destroyed 13% of the grain and oilseed crop, a government weather forecaster said.

The South has gotten below-average rain since September due to the La Nina weather pattern, bringing up concern that crops being planted now will be destroyed before the following year's harvest, said an analyst. The southern states of Parana, Santa Catarina and Rio Grande do Sul make up 41% and 37% of Brazil's corn and soy production, respectively.

In 2005, the amount of grain and oilseed production plummeted to 113.5 million tonnes, in contrast to an initial forecast of as much as 130.9 million tonnes, during the worst drought seen in 40 years, according to data from the Agriculture Ministry. The same damage may take place this year if dryness persists, said the analyst.

"We've seen days with too much rain followed by long periods of drought, which is not good for soy and corn," the analyst said. "If dryness continues in December, we may see the 2005 phenomenon repeating."

Corn cannot endure more than 15 days without rain. Soy can tolerate about 30 days of dry weather, with possible losses, he said. A better forecast on how the dry weather will affect the harvest will be available by December 15, he said.

Soy futures for January delivery rose by US$0.20, or 1.7%, to US$12.22 a bushel on CBOT.

Corn futures for December delivery decreased by US$0.055, or 1%, to US$5.29 a bushel. On November 9, the grain reached US$6.05, the most for the contract since August 29, 2008.

Soy growers in Brazil, the world's biggest producer after the US, will harvest between 67.7 million and 69 million tonnes in the following year as compared with 68.7 million tonnes this year, the Agriculture Ministry said on November 10. Corn farmers will likely harvest between 51.8-52.7 million tonnes in 2011, a decrease from 56 million this year, the ministry said.