US, Brazil crop upgrades ease soybean supply fears
By - Published 11/01/2013

Soybean futures touched a six-monthg low, missing out on the gains achieved by grains, after US officials lifted their estimates for both US and Brazilian crops, reducing the pressure on prices to ration demand.

The US Department of Agriculture, in its much-watched monthly Wasde report, raised its estimate for last year's harvest by 44m bushels to 3.015bn bushels (82.1m tonnes), "based on increased yields and harvested area" from the previous figure.

The upgrade which put the harvest only 79m bushels below the 2011 result, despite last year's devastating drought - was a little more than the market had expected.

And it was accompanied by an upgrade too to the Brazilian crop, by 1.5m tonnes to a record 82.5m tonnes.

'Yield prospects increased'

"Brazil is forecasted to be the world's largest producer of soybeans, surpassing the US this year when the US suffered through its worst drought in 50 years," the USDA said.

Wasde US soy data, 2012-13, change on previous figure, and on (market forecast)

Yield: 39.6 bushels per acre, +0.3 bushels per acre, (in line)

Area harvested: 76.1m acres, +400,000 acres, (+550,000 acres)

Output: 3.015bn bushels, +44m bushels, (+27m bushels)

December 1 2012 stocks: 1.97bn bushels, n/a, (in line)

Marketing year end stocks: 135m bushels, +5m bushels, (+2m bushels)

Sources: USDA, Reuters

The assessment reflected an upgrade to 3.00 tonnes per hectare in the forecast for the Brazilian soybean yield, a figure up 12.8% year on year, besides higher plantings.

"Yield prospects for Brazil soybeans have increased due to good early-season conditions in the key states of Mato Grosso and Parana," the USDA said.

"Brazilian farmers reacted enthusiastically to high soybean prices this year and increased area by 10% to a record 27.5m hectares."

'Less need for rationing'

The upgrade to hopes for Brazil's crop contrasted with a downgrade of 1.0m tonnes to 54.0m tonnes in the forecast for the harvest in neighbouring Argentina, reflecting the persistent rains which have cut sowing hopes by some 2% to 19.5m hectares.

"Recent rains continue to hamper seeding in some areas," the USDA said, flagging "problem areas" in parts of Buenos Aires and Cordoba provinces, where some 270,000 hectares of land looks like going unseeded.

Nonetheless, the USDA lifted its estimate for global soybean production in 2012-13 by 1.7m tonnes to 269.4m tonnes, easing slightly the tightness in supplies.

"Extra soybean supply and a larger South American soy crop lessens the need for soybean rationing," Richard Feltes at broker RJ O'Brien said.

Chicago soybean futures for March delivery stood 0.7% down at a$13.70 a bushel in late deals, after hitting $13.51 a bushel earlier, the contract's lowest since late June.

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