Brazil Cuts Soy Crop, Sales Slow

The crop supply branch of Brazil’s agriculture ministry on Tuesday cut its 2004-2005 (Oct/Sept) soybean crop forecast to 53.1 million metric tons from a previous estimate of 57 million tons issued on March 7, due to drought conditions in southern producing states.

However, Conab left the 2004-2005 corn crop forecast at 39.03 million tons. Last year Brazil harvested 42.1 million tons of corn. Conab estimated Brazil's overall grains crop at 119.49 million metric tons, compared with 123.4 million tons previously and 119.1 million tones harvested in 2003-2004.

Most private estimates of Brazil’s soy crop are even smaller. Safras & Mercado, a highly respected Brazilian newsletter, now says only 51.9 mmt of soybeans will be harvested in Brazil versus a 61.2-mmt estimate a month ago.

Agroconsult’s new prediction is in the same ballpark at 51.8 mmt. Their analysts stated that Rio Grande do Sul is in the midst of its worst drought in 64 years and that 70% of the crop has been lost in Brazil’s #4 soybean-producing state.

They also noted that many beans are too small for the export market and are low in protein content. On the other hand, Agroconsult reported record yields in the #1 soy state of Mato Grosso.

It’s also interesting that Brazilian farmers have been slower to reward price rallies this year than last. Private analyst Celeres says only 48% of this year’s Brazilian crop has been sold, compared to 61% a year ago. Only an estimated 3% of the crop was sold last week when prices at the CBOT were moving higher.

Rains forecast this week in Brazil's southern states won't be enough to end the drought, meteorologist Somar said.

Editors note: Richard Brock, The Corn and Soybean Digest's Marketing Editor, is president of Brock Associates, a farm market advisory firm, and publisher of The Brock Report.

To see more market perspectives, visit Brock's Web site at www.brockreport.com.