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US clings to claim as world's top soybean grower

The US clung on to its claim as the world's top soybean producer, countering a challenge from Brazil, despite acknowledging that early results from the South American country's harvest had been better than expected.

The US Department of Agriculture, in its monthly Wasde report, raised by 400,000 hectares to 29.5m hectares its estimate for the area of soybeans that Brazilian farmer will reap in the newly-started harvest.

"Brazilian farmers increased soybean area because of higher expected profits—area is up 6.4% from last year's record area," the USDA said.

"Although soybean prices are lower this year than in 2012, soybeans are still profitable - even though costs have increased due to higher rates of pesticide applications."

Profitability prospects had been helped by the weakness in Brazil's real, which "results in higher values [in local terms] for exported soybeans which are sold on the global market", and with slow forward sales signalling that farmers are betting on further devaluation.

'Only minor concerns'

However, the USDA stuck by its forecast for a Brazilian soybean yield of 3.02 tonnes per hectare, despite acknowledging that early yield results from the harvest in Mato Grosso, the top producing state, were "higher than expected".

"There are only minor concerns about dryness in southern Brazil and in frontier areas of the north eastern regions in the states of Maranhão and Piauí," the USDA added.

"Despite concerns about Asiatic soybean rust and old world bollworm, farmers have been well-equipped to handle these pests, albeit at higher costs."

Who's the top dog?

The yield figure left the USDA's estimate for the harvest, while upgraded by 1.0m tonnes to 89.0m tonnes, short of the 90.3m tonnes forecast on Thursday by Brazil's official Conab bureau.

Conab used a slightly higher area figure, and a yield estimate of 3.06 tonnes per hectare.

The USDA estimate also left the US as the world's top producer - with the domestic crop upgraded by 950,000 tonnes (41m bushels) to 89.5m tonnes (3.29bn bushels).

US farmers, at 75.9m acres, had harvested a slightly bigger area than previously thought and, at 43.3 bushels per acre, achieved a better yield.

Market reaction

The US harvest estimate was also a little bigger than investors had thought.

Nonetheless, Chicago soybean futures for March stood 0.3% higher at 12.77 ¾ a bushel in late deals, after the USDA stood by a forecast that domestic stocks will end 2013-14 at a constrained 150m bushels, with the upgraded harvest supplies mopped up by extra consumption.

The estimate for US soybean exports was increased by 20m bushels (550,000 tonnes) to 1.495bn bushels (40.7m tonnes), "reflecting record shipments during the first quarter of the marketing year and strong sales through December".

The forecast for the domestic soybean crush was nudged higher too, by 10m bushels (280,000 tonnes), "reflecting higher projected soymeal exports".

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