MercoPress. South Atlantic News Agency

Forecasts of another boom year for soybean farmers

The German Hamburg based publication Oil World has cut its estimate of the Brazilian 2007/08 soy crop to 59.3 million tons, down from the previous 59.8 million tons.

Oil World which specializes on oilseeds, oils and meals said that adverse climatic conditions are having an effect on Brazil's crop which is now forecasted just above last season's 58.39 million tons. Oil World estimates the Argentine soy crop at 47.3 million tons, above the previous forecast of 47 million tons but below the 49 million tons harvested in 2007. Bolivia's oil seeds production will also suffer and is now estimated at 1.05 million tons compared to the 1.6 million tons of the previous crop. The forecast for Paraguay is more encouraging according to Oil World, 6.5 million tons, up from the 5.86 million tons production of last year. "The new losses in South America will make even tighter the world soybean balance and will probably have a strong influence in the reduction of global reserves to 21/22 million tons towards the end of August 2008, unless high prices ration consumption", argues the German magazine. The report also estimates that Argentine soy bean exports from March 2008 to February 2009 will drop to 9.6 million tons, compared to the 12.5 million tons of the same period a year ago. "We believe there will be more imports to Argentina; an increase in the processing volume of the bean and a strong drop in the export of soy beans". In related news Merrill Lynch said the US supply of soybeans will probably fail to meet demand, as farmers plant the smallest crop in four years at 2.6 billion bushels, the US Department of Agriculture's data. Stocks of soybeans will plunge to 160 million bushels from 574 million this year, the brokerage said. There is "unprecedented demand growth from emerging markets" for vegetable meal to feed animals, which will drive soybean meal prices but it didn't give a forecast price for soybean or soybean meals. Soybean futures soared to a record 13.98 US dollars a bushel Friday on concern demand from China will increase. They have gained 86% in the past year. "Going into 2008 the supply-demand balance for agricultural commodities looks extremely tight", underlined Merrill and Lynch adding that "global grain and oilseed inventories sit at very low historical levels in terms of demand coverage, lending support to prices and pushing up volatility".