Analysts Eye South America

January 25, 2017 02:36 AM

Sizeable crops seems possible, but unknowns remain

So far, favorable South American weather forecasts support estimates of increased crop production in Brazil and Argentina. As a result, some analysts are betting on bigger U.S. ending stocks.

Ahead of USDA’s Jan. 12 reports, INTL FCStone based in Kansas City estimated ending stocks of U.S. corn would be 2.49 billion bushels if South America benefited from favorable weather for the safrinha corn crop. Those figures came from Arlan Suderman, the firm’s chief commodities economist.

Meanwhile, at least one well-known analyst for South America is hedging bets about production in the Southern Hemisphere with a projection of “neutral.”

Pedro H. Dejneka, who advises multiple medium and large farming operations throughout Brazil, estimates 103.2 MT of soybeans in Brazil and 54.5 MT in Argentina.

“Those estimates are still up for tweaking, as it is a long growing season with very different key dates,” Dejneka says. “The view is neutral going forward. January and February climate will have a lot to say on where the numbers end up.”

Rainfall returned in early January to most of the Brazilian regions where soybeans are grown.

The conditions were a benefit to farmers with soybeans ready for harvest, and they also pushed along the development of crops that still needed moisture to achieve good yields, according to Brazil’s Somar Meteorologia weather forecaster.

One U.S. marketing firm, Water Street Solutions, of Peoria, Ill., has already taken the recent favorable weather into account. 

“Brazil is almost out of the woods, as many beans were planted early with good subsoil moisture,” the firm wrote in its newsletter.

Brazil’s national grain agency, Conab, has announced it expects an increase in 2017 plantings of both corn and soybeans.

Corn plantings will go up 7% to 16.1 million hectares, while soybean plantings will increase by 2% to 
33.9 million hectares, according to the agency’s forecast. Meanwhile, wheat plantings will remain unchanged at 2.1 million hectares. 

Producers have finished planting summer corn and soybeans in Rio Grande do Sul state, reports Brazil’s Globo Rural magazine. Nearly half of soybeans in the Uruguay River region were to be planted in January.

Conab estimates soybean exports will go up 10% in 2017 to 56.5 million tons, according to the Center for Advanced Studies in Applied Economics (Cepea) at the University of Sao Paulo.

In Argentina, there are concerns drought in some areas and excess rain in others could adversely affect the soybean crop.

“About 10% of the area remains to be planted, which is about 1.9 million hectares,” wrote Pablo Adreani of AgriPAC, a consultancy based in Buenos Aires, in early January. That equates to 3.8 million tons of production.  

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