MercoPress. South Atlantic News Agency

World soy production forecasted to fall next season; Argentina could be the exception

Oil World's forecast for a drop in world production next season, the first decline since 2011-12, reflect largely an expectation of a 104.0m-tons US crop, down 4m tons

World soybean production will fall next season for the first time in four years, undermined by a drop in US output, although the fall may not prove sufficient to support prices, Oil World said. However in South America, Argentina and Paraguay could be heading for new record crops.

 “It is questionable whether the latest [soybean price] gains are sustainable,” the influential analysis group said despite, in its first estimates for 2015-16, forecasting a drop of some 2m tons in output.

“Even if world production declines slightly or moderately… world supplies of soybeans will remain ample and increase sizably thanks to the unusually large opening stocks in 2015-16.”

The German-based group sees global soybean inventories rising by 34% to 87.7m tones this season. “Early prospects for 2015-16 suggest that there will be no shortage of soybeans worldwide – but rather a surplus.”

Oil World's forecast for a drop in world production next season, the first decline since 2011-12, reflect largely an expectation of a 104.0m-tons US crop, down 4m tons year on year.

The group said that it was factoring in a retreat in the yield from last year's record highs to 3.06 tons per hectare, equivalent to 45.5 bushels per acre, which it termed the 15-year trend figure.

“It remains to be seen whether some farmers are cutting back inputs in view of the depressed prices, risking yield losses.”

For South America, the group forecast a 2.2m-ton drop to 92.0m tons in Brazil's harvest, a fall more than offset by increases in Argentina and Paraguay.

Oil World forecast flat Brazilian sowings for 2015-16, but acknowledged concerns, highlighted by US Department of Agriculture staff, of a drop in area “in view of the possible further [soybean] price decline, the high interest rates, lack of government credit [and] the sharply increased costs resulting from the devaluation of the real”.

Brazil imports some 70% of its fertilizers and other inputs.

The group also highlighted uncertainty over Argentina, where the result of elections later this year could prompt a cut in export taxes on soybeans, but also swings in the peso.

However, “if about normal weather conditions prevail, we should see some recovery in the average yield, probably pushing the Argentine soybean crop to a new high of 57m toes in early 2016.”