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South America's soy and sunflower crops below expectations

Thursday, January 17th 2008 - 20:00 UTC
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Unfavourable weather the main reason Unfavourable weather the main reason

World soybean supplies are smaller than expected and high exports are cutting stocks in key producing countries, Hamburg-based oilseeds analysts Oil World said.

"World supplies of soybeans are tightening and will turn out smaller than expected in the period February/August 2008" it said. Oil World estimates combined soybean stocks in the four main exporting countries, United States, Argentina, Brazil and Paraguay will fall to 52.80 million tons at the end of January 2008, down by 13.3 million tons from early Sep 2007. "World disposals of soybeans have been very strong so far this season, also reflected in the large exports and usage of soy oil and meal". "Insufficient production of other edible oils and oil-meals made it necessary to boost soybean crushing". The forecast if for United States, Argentina, Brazil and Paraguay to raise combined soybean exports to 28.37 million tons in September 2007-January 2008, up from 24.83 million tons in the same period a year ago. However a critical supply factor will be South American harvests in early 2008. "South American production prospects have deteriorated in the first ten days of January" adding that "It can no longer be excluded that combined South American soybean production will just stagnate or even decline slightly in early 2008". Current estimates of Brazil's crop in early 2008 were 60.3 million tons, up from 58.4 million tons last year and Argentina's at 47 million tons, down from 48.1 million tons last year. "We still use a relatively optimistic soybean crop estimate for Brazil," it said. "There is also the risk that the Argentine crop will decline this year to a lower level than we are currently assuming". Oil World also forecast that global sunflower oil prices are likely to remain high partly because of concerns Argentina's sunflower harvest will be smaller than expected. Key Argentine sunflower-oil export prices have touched record levels of around US$1,490 a ton so far this month, up about US$130 a ton in the last four weeks. "The sun-oil supply outlook for Jan-Sep 2008 has worsened due to the crop deterioration in Argentina and the heavily front-loaded Ukrainian export programme". "Importers will thus face dwindling export supplies and probably ongoing price firmness in the near to medium term." Major traditional world market suppliers including Ukraine and Russia are likely to reduce exports in coming months following poor sunflower crops and a major rise in Argentina's sunflower crop had been viewed as vital to fulfilling global demand, it said. But unfavourable weather means Oil World has cut its forecast of Argentina's 2008 sunflower crop to 4.25 million tons from its previous estimate of 4.5 million tons. This will be sharply up from the 3.3 million tons harvested in 2007, but not enough to meet high global demand for sunflower oil.

Categories: Economy, Latin America.

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