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Heat threatens up to 5m tonnes of Brazil soybeans

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Up to 5m tonnes of Brazilian soybean output is at risk from the heatwave which has already sent coffee prices soaring, influential crop scout Michael Cordonnier said, amid growing concerns over South American weather.

The Brazilian soybean crop currently looks like hitting at 90m tonnes, Dr Cordonnier said, a figure in line with that from other commentators, including Informa, which actually raised its estimate for the crop on Tuesday by 1m tonnes to 89.7m tonnes.

The US Department of Agriculture, whose estimates set world benchmarks, pegs the harvest at 89.0m tonnes.

However, such forecasts have been jeopardised by the "record high temperatures" which represent a threat in particular to the soybean crop in southern states, such as Rio Grande do Sul, besides the coffee and sugar cane crops in central areas.

'So laissez faire'

"People have been so laissez faire about the weather, thinking we are definitely on for this huge crop," Dr Cordonnier, at Soybean and Corn Advisor, said.

But January "will go into the record boosts as one of the hottest months ever" for cities such as Sao Paulo, Rio de Janeiro and Curitiba, the capital of the important growing state Parana, with February "showing no sign of improvement".

Rio Grande do Sul, the third biggest soybean producing state, with output expected by official bureau Conab to hit 5.3m tonnes, could lose a hefty portion of this, given that its crop is in the sensitive flowering and pod-setting period.

Minas Gerais, the main coffee growing state, where dryness has been particularly acute, may be vulnerable to a downgrade too.

'Worst case scenario'

Further losses may be on their way if farmers do not plant the 1m hectares of safrinha soybeans, planted after the main crop, that Dr Cordonnier has factored in.

Ironically, in Mato Grosso, the top soy-producing state, the main crop soybean harvest has been slowed by persistent rains, eating into the narrow window available for planting safrinha crops.

Furthermore corn, the typical choice as a safrinha crop, is looking a better bet than a few weeks ago, thanks to a recovery in prices.

"I think altogether maybe 3-5m tonnes of Brazilian soybeans are at risk," Dr Cordonnier said, adding that an 85m-tonne harvest was a "worst case scenario".

Informa downgrades

Concerns over South America's crops were also revealed on Monday by AgRural, the Brazilian consultancy, which cautioned it might downgrade its forecast for the Brazilian soybean harvest because of the hot weather, citing uncertainty over output from Rio Grande do Sul, parts of Parana and the North East.

Separately on Tuesday, Informa Economics, while raising its Brazil soybean forecast, downgraded Argentina's corn harvest by 2.4m tonnes to 22.6m tonnes, citing erratic rains and hot temperatures, and the soybean crop by 500,000 tonnes to 57m tonnes.

The Brazilian corn crop was downgraded by 1m tonnes to 66.55m tonnes, well below the USDA figure of 70.0m tonnes.

Other commentators cautioning over South American crops include Jerry Gidel, chief feed grains analyst at Chicago broker Rice Dairy, who warned that "trade sources are concerned" about Argentine weather "slipping this corn crop to 23m-24m tonnes from the USDA's 25m-tonne estimate".

He added: "Declining rainfall in Brazil's central and northern areas over the last few weeks has put some concern into Brazil's safrinha corn prospects."

By Agrimoney.com

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