Drought Meeting Deluge Dims Brazil Soybean Prospects

Brazilian soybean growers will harvest less than previously estimated after low rainfall and high temperatures harmed crops in the largest exporter of the oilseed used in tofu to cooking oil, the government said.

The production outlook for the 2013-2014 season was cut to 85.4 million metric tons from last month’s 90 million-ton forecast, agricultural agency Conab said by e-mail today. The corn estimate was lowered to 75.2 from 75.5 million tons.

The worst drought in decades parched crops in Brazil’s south and southeast in the past two months, while excess rain in the west delayed harvesting. Concern that adverse weather conditions will reduce supplies helped push up international prices for soybeans, corn, coffee and sugar this year. Soybean futures traded in Chicago are up 8 percent.

“While in some states a lack of rain was predominant, in others the problem was the excess,” Conab said in today’s report.

Temperatures as high as 39 degrees Celsius (102 Fahrenheit) and more than 40 days without rain lost Ricardo Wolter, president of the rural association in the southern city of Carambei, about 76 percent of his soy production at his 300-hectare (740-acre) farm. His crop yielded 16.7 60-kilogram (132-pound) bags per hectare on average from 70 bags last season.

“I’d never seen drought like this, with soybean plants literally dying under the heat,” Wolter told analysts and reporters yesterday during a crop survey conducted by researcher Agroconsult in the southern state of Parana. “I only decided to harvest because I had already sold a third of the crop.”

Yield Drop

Average soybean crop yields in Parana will probably drop to 51 bags per hectare, from 56 bags in the previous season, Agroconsult analyst Fabio Meneghin said.

Most soybean and corn harvesting in Brazil started in January, following planting in September and October.

Even after the reduced forecasts for the crops that growers are still reaping in several areas, soybean production is expected to rise from a record 81.5 million tons harvested last season, Conab said. Corn output is seen dropping from a revised 81.5 million tons.

The impact of the bad weather on soybean crops may have been overestimated by some analysts, Agroconsult’s Meneghin said. The volume produced in the western state of Mato Grosso wasn’t cut by excessive rain, while recent rainfall in southern states is helping ease damage from drought, he said.

Other Estimates

Agroconsult said it trimmed its estimate for Brazilian soybean production to 89.2 million tons from 90.8 million in a March 7 report. This month, researcher Celeres reduced its forecast to 84.9 million tons from 89.2 million, while INTL FCStone cut its estimate to 87.5 million from 90.3 million.

Showers in past weeks that are expected to continue for the rest of this month may ease damage caused by the dry spell, Agricultural Policy Secretary Neri Geller told reporters in Brasilia today. Conab will have a better assessment of the full impact of the drought next month, he said.

Soybeans for March delivery fell 2.4 percent to $13.795 a bushel at 9:30 a.m. on the Chicago Board of Trade.

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