South America Calling

Brazil Analysts Diverge On Soy Crop

Two private Brazilian soy crop forecasts dropped into my inbox, one raising its number and the other just trimming.

But while taking opposing positions, they seek to highlight two different points.

First up is INTL FCStone, which lowered its 2015-16 soybean crop view from 100.4 million metric tons to 98.8 mmt after a dry November in the Center-West and the eastern Cerrado states of Bahia, Piaui, Tocantins and Maranhao, a region known as Matopiba.

While productive potential has been impaired in Mato Grosso and Goias, FCStone said, the biggest threat to crops is in Matopiba.

While the Center-West rainfall is normally well in excess of needs and lower-than-average precipitation is not necessarily disastrous there, Matopiba does not enjoy that excess and needs rains to fall, explains Natalia Orlovicin, grains analyst at INTL FCStone.

Then you have Celeres, a local consultancy, which raised its estimate from 98.9 mmt to 101.8 mmt, based on a larger-than-expected planting area.

It raised its planted area forecast by 500,000 acres to 81.6 million acres, still lower than INTL FCStone, as farmers transfer more acres from first-crop corn. They have opted for soybeans following the devaluation of the real, which has favored the oilseed much more than summer corn, which is basically consumed internally.

While noting the problems in the Center-West and Matopiba, Celeres chose not to significantly alter its yield forecasts to take this into account.

With more farmers switching from summer corn to soy, more will also plant second-crop corn, says Celeres.

It estimates area will rise 7% to 24.5 million acres in 2016 and output will jump 5.5% to 58.2 mmt.

But, again, INTL FCStone diverges, focusing instead on the climatic conditions.

It pegs second-crop output at 53.3 mmt, down from 54.5 mmt last year, despite a projected 1.6% increase in acreage.

The dry October and November in the Center-West that delayed soybean planting will in turn mean a significant portion of the region's second-crop corn will be sown after the ideal planting window, it said.

"Second-crop corn will be subject to greater climatic risk as the rains tend to diminish from April and May and low temperatures can lead to frosts, for example, said Ana Luiza Lodi, an INTL FCStone analyst.

So, two very different takes on the situation. Your preference is probably based on how well tropical soybeans bounce back from early dry spells and how concerned you are about forecasts of further dry weather in the Center-West in January.



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