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Brazil downplays threat to soy from dryness, heat

Brazil restated its claim to top rank in world soybean production, downplaying the impact of hot and dry weather, and maintained an upbeat stance on corn output too, despite foreseeing a drop in safrinha sowings.

Although Conab, Brazil's official crop bureau, trimmed its forecast for the domestic soybean crop by 320,000 tonnes to 90.0m tonnes, that was still  enough to promote the country to top producer of the oilseed.

"This season, Brazil should become the largest producer, surpassing the US," Conab said,

The US Department of Agriculture, which on Monday also pegged Brazil's soybean crop at 90.0m tonnes, estimates the US harvest for 2013-14 at 89.5m tonnes.

Weather assessment

Conab's forecast came despite the concerns over hot and dry weather in some central area notably the key cane producing state of Sao Paulo and the coffee belt heartland of Minas Gerais which have sent prices of sugar and arabica beans higher.

"So far as I would say, the climate question has been innocuous to the numbers presented," said Rubens Rodrigues dos Santo, the Conab president.

In fact, the bureau did make cut its forecast for soybean output in Sao Paulo and Minas Gerais thanks to lower yield hopes, but by a modest 200,000 tonnes to a combined 5.85m tonnes.

In Minas Gerais, "crops appear to be developing well, with the first crops showing good yields and good quality product, but only with the advancement of harvest will be possible to assess whether there will be any impact arising from January's drought", Conab said.

Soybeans vs cotton

The bureau made a larger downgrade to its forecast for domestic corn production, by 3.5m tonnes to 75.47m tonnes.

However, this reflected expectations of a dent from low grain prices, rather than poor weather, to sowings of second-crop, or safrinha, corn, which in some areas is planted as a follow-on from the soybeans currently being harvested.

In Mato Grosso, the top safrinha corn state, plantings will fall 5.8% to 3.16m hectares, thanks to fears for the impact on profitability of the "high fees" paid for transport crop from farms to port through Brazil's overstretched rail and road infrastructure.

Furthermore, cotton has become a "strong competitor", thanks to resilient prices, which in New York's Ice futures market on Monday set a six-month high of 88.84 cents a pound.

Range of estimates

The safrinha crop overall was pegged at 42.8m tonnes - well below the 46.2m tonnes which had been pencilled in, although this figure reflected Conab methodology of repeating the previous year's harvest result in initial forecasts.

The overall Brazil corn harvest estimate of 75.47m tonnes remains above that of many other commentators, including the USDA, which on Monday pegged the crop at 70.0m tonnes.

Broker FCStone last week estimated the harvest at 72.2m tonnes, but Celeres on Monday revealed an estimate of 79.5m tonnes.

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