South American soybean production may be larger than previously estimated in the 2013-14 season as farmers expand planting to a record, Oil World said.
Production in the top five growers of the oilseed may rise 10% from a year earlier to 159.8 million metric tons in the period, the researcher said in an e-mailed report. That compares with a forecast of 158.5 million tons made at its outlook conference on Nov. 29. Leading global exporter Brazil will harvest a record 89 million tons as Argentina’s crop gains 14% to 55.5 million tons, according to the report.
Both Brazil and Argentina, the third-biggest shipper after the U.S., will plant record amounts of soybeans in 2013-14 at 29.9 million hectares (73.9 million acres) and 20.5 million hectares, respectively, Hamburg-based Oil World said. Uruguay’s soybean area more than doubled in the past five years. Lower corn prices mean it’s unprofitable for many farmers to grow the grain, so more acres are being switched to soybeans, it said.
“Soybeans are the most attractive crop at the moment because of their comparatively high prices,” Oil World said. “The prospective South American supply pressure is likely to have a bearish impact.”
Soybeans dropped 4.8% this year on the Chicago Board of Trade, less than corn’s 37% plunge. Demand from China, the world’s top importer of the oilseed, kept prices from falling further. The country purchased a record 24 million tons from the U.S. as of Nov. 28, up from 17.5 million tons at the same time last year, boosting stockpiles in case logistical bottlenecks delay shipments from the South American harvest starting early next year, Oil World said.
Brazil’s crop may still be at risk as growing areas in Mato Grosso and Mato Grosso do Sul states face a caterpillar infestation, Oil World said. The insect larvae may damage as much as 1.5 million tons, it said. Some Brazilian farmers plan to sow a second annual soybean crop, rather than rotate fields to corn. A second soybean crop may cover about 700,000 hectares, producing as much as 2 million tons, the report showed.
“Lack of rotation is causing concern, reducing the quality of the soils and raising the risk of diseases and pests as well as requiring higher inputs of fertilizers and pesticides,” Oil World said. “This is contributing to higher production costs.”
In Argentina, planting of grains including corn and wheat may drop to a four-year low of 12.7 million hectares as farmers focus on oilseeds, Oil World said.