South America's drought withered Brazil's big soybean crop by 9 percent in the past three months, and the crop in Argentina by 11 percent, the U.S. government said Friday, more than traders had expected.
The smaller crops in Brazil and Argentina, which combined grow nearly half of the soybeans in the world, means slightly smaller but still ample global stocks, the Agriculture Department said in its monthly assessment of crops worldwide.
Soybean futures prices rose early on the news, rising 14 cents to $13.46 a bushel at the Chicago Board of Trade. Corn was up 2 percent to $6.58-1/2 a bushel and wheat was up 2 percent to $6.42 a bushel.
"It wouldn't surprise me if we lower the bean crop once again in South America," said Mark Schultz, chief analyst for Northstar Commodities.
Analyst Anne Frick of Jefferies Bache said she believed South American crops "are still lower than USDA indicated today." Despite what some called the crop carnage in Latin America, USDA left its estimates unchanged for U.S. corn and soybean ending stocks. Traders had expected some reductions in belief U.S. sales would rise to make up for the shortfall in South America.
USDA estimated Brazil's soybean crop at 68.5 million tonnes, down 5 percent from February and down 9 percent since December. Traders had expected a crop of 69.4 million tonnes. Argentina was forecast for 46.5 million tonnes, down 3 percent from February and down 11 percent overall. Traders had expected a crop of 46.8 million tonnes. Paraguay's crop was also hit hard, slashed 34 percent from earlier expectations, said USDA.
Rainfall was at a 25-year low in Paraguay from November through February while drought hurt Brazil's southern states and hot, dry weather hit the crop in northeastern Argentina. "U.S. soybean exports are unchanged at 1.275 billion bushels as reduced supplies in South America raise prices, reducing global imports," said USDA.
The United States is the No. 1 soybean grower and No. 2 exporter. China, which buys more than half of the soybeans on the world market, was forecast to import 55 million tonnes this marketing year, down 1.5 million tonnes since January. USDA's forecast of the world soybean crop is down by 5 percent since December, which has tightened supplies.
USDA raised its forecast for Brazil corn by one million tonnes, on larger expected area for the "second" crop planted after soybeans, and held steady at 22 million tonnes of corn in Argentina. Traders had expected reductions in both countries. Larger exports will reduce U.S. wheat stocks to 825 million bushels, but it was 1 percent larger than traders expected. At the end of March, USDA will estimate U.S. plantings, based on a survey of growers, and list the size of U.S. stock piles.
Traders say both will be significant in shaping expectations for market prices and the size of the new crop. Farmers are projected to plant the largest corn area since World War Two. Informa Economics, a private consultant, raised its forecasts of U.S. corn plantings to 95.5 million acres from 94.8 million acres and soybeans to 75.13 million acres from 74.6 million acres.
USDA has projected 94 million acres of corn and 75 million acres of soybeans. The corn crop could be well above 14 billion bushels, a record, under either planting total.
(Editing by Russell Blinch and Bob Burgdorfer)