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Argentine Soy Estimate Lowered; Brazil Soy Yields Fall

Argentine Soy Estimate Lowered; Brazil Soy Yields Fall

20 March 2012

ANALYSIS - Estimates for the Argentine soybean crop have been lowered by 3 per cent versus last month and 5 per cent versus last year, writes Sarah Mikesell, TheCropSite senior editor.

Argentine farmers are expected to bring in 46.5 million tons of soybeans for the 2011/12 season, with production harvested from an estimated 18.6 million hectares, 2 percent more area than last year and the same as last month, according to USDA's World Agricultural Production report. Yield is expected to fall to 2.50 tons per hectare, 3 per cent lower than last month and 7 per cent lower than last year.

Argentina's main growing regions of northwestern Buenos Aires, southern Cordoba and far-southern Santa Fe have felt the effects of the drought, and first-crop soybeans are showing stress with yield losses expected to be 20 to 25 per cent.

The areas hardest hit by the December and early January drought may have suffered losses in yield potential in some second-crop soybeans. In western Buenos Aires, first crop soy is already in mid- to late-reproductive plant stages after receiving 500 mm of rain from January and early February and then having received another 300 mm just recently.

That said, the recent drought damage was not comparable to the one suffered in 2009 Argentina which was the worst drought in 50 years. Argentina lost 20 million tons of soybeans, 8 million tons of corn, 8 million tons of wheat and 3 million tons of sunflower. Their total loss in 2009 was about 40 per cent of the total crop or 41 million tons, said Pablo Adreani, Market Analyst and Agribusiness Project Manager, Director of AgriPAC Consultants during USDA's Agricultural Outlook Forum 2012.

Mr. Adreani also noted that when combined, Brazil and Argentina are the largest exporters of soybeans, soybean oil, soybean meal, beef and poultry. Since 1995 Argentina has doubled their total grain production from 46 million tons to 100 million tons and at the same time increased their domestic consumption of poultry and pork.

"Global soybean demand has grown far faster since 1990/91 than has demand for corn, cotton, rice and wheat," he said. "This has been because of strong economic growth, particularly in China and elsewhere in Asia which has driven demand for meat, milk, and eggs, leading to faster growth in plantings and production of soybeans in North America and South America. Corn demand has grown faster in recent years because of the growth in the US corn-based ethanol sector. Cotton demand has fallen as a result of the recession. Wheat demand has grown slowly as people around the world have shifted to eating more meat."

Brazil: Estimated Soybean Yield Continues to Fall

Brazil soybean production for 2011/12 is forecast at 68.5 million tons, down 3.5 million from last month and down 7.0 million or 9 per cent from last year. Area is forecast at a record 25.0 million hectares, unchanged from last month and up 0.8 million or 3 per cent from last year.

Yield is forecast at 2.74 tons per hectare, down 5 percent from both last month and the 5-year average. Drought from December through February significantly reduced yield prospects in the southern states, and favorable yields in the center-west and northeastern states will not compensate the considerable losses in the south.

The harvest pace is advancing quickly with 35 percent of the crop harvested by the beginning of March, approximately 10 per cent ahead of last year's pace. The harvest in the south is advancing more rapidly than last year due to severe drought that caused the crop to wilt and die before pods completely filled or matured.

Harvest reports of low yields in the southern states of Rio Grande do Sul, Parana, Mato Grosso do Sul, and Santa Catarina have reduced national output estimates by over 6 million tons from initial forecast projections.

Brazil: Safrinha Corn Crop Will Offset First-Season Drought Losses

The lack of rain from November through February lowered yield prospects for Brazil's main season corn, thus giving prices enough of a boost to encourage growers to plant a record amount of Safrinha (second-season) corn. The planted area and expected high yields for Safrinha corn are expected to offset the main-season losses.

Output of Safrinha corn is forecast to comprise about 42 per cent of Brazil's total corn crop, compared to 38 per cent last year.

Brazil corn production for 2011/12 is forecast at a record 62.0 million tons, up 1.0 million tons from last month and up 4.5 million or 8 percent from last year. The increase is due to higher estimated planted acres of Safrinha corn, with total harvested area expected at 15.3 million hectares, up 0.3 million from last month and up 1.5 million or 11 per cent from last year. Yield is forecast at 4.05 tons per hectare, which is slightly above the 5-year average of 3.95 tons per hectare.

Planting of Safrinha corn began in January, and the cut-off date for planting is usually the first week of March. Growing conditions for the Safrinha crop appear good and the biggest risk to the crop is if the rainy season would taper off in April.

Brazil exports their corn to 47 countries with the main markets in 2011 being Iran, Taiwan, Japan, Algelia and Morocco. Globally, Brazil is the third largest exporter of corn, behind the US and Argentina. Brazil's total corn area harvested in 2010/2011 figures place them third behind the US and China at 13,800,000 HA, with 8 per cent of the world's total share of harvested acres.

Further Reading

You can view the full USDA World Agricultural Production report by clicking here.

Sarah Mikesell, Senior Editor

Sarah Mikesell, Senior Editor

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