MercoPress. South Atlantic News Agency

Soy prices set to increase because of poor crops in South America

World stocks of soybeans are set to decline steeply to a five year low of around 50 million tons at the end of the season (10 million tons less than a year ago), mainly because of smaller crops in the leading exporting countries of South America, according to Oil World.

This would raise world dependence on US supplies in the first half of next season. As a consequence US soybean stocks are estimated to fall to 3.6 million tons for the end of next August, 100.000 tons less than May 12, and 5.58 million tons below a year ago.

This happens in the context of poor crops from the five main South American soybean exporters, Brazil, Argentina, Paraguay, Bolivia and Uruguay, which overall harvested 96.7 million tons at the beginning of this year, which is 18.1 million tons less than a year ago.

The smaller overall crop is mainly because of the prolonged drought in Argentina.

Oil World estimates that the Argentine 2009 soy crop will drop to 33 million tons from the previous 46.7 million tons, while Brazil will also suffer a contraction, but to a lesser extent from 60.01 million to 57.62 million tons this year.

Argentine beans and oil exports between March 2009 and February 2010 will fall to 4.7 million tons compared to the 11.79 million tons of the same period a year ago.

“World demand for soy beans, oil and other derivates has turned partially towards the US given the insufficient supply from South American exports”, adds the Hamburg based publication.