South America drought causes irreversible crop damage, reduces global soybean production by 7 percent
29 February 2012 (USAgNet) – Global reserves of soybeans are shrinking the most in 16 years as demand for food, feed, and fuel rises, creating the biggest-ever exports for U.S. farmers. Inventories at the start of the next season on October 1 will be 20 percent lower than a year earlier, Jefferies Bache LLC predicts. According to Bloomberg News, prices that rose 8.7 percent since December 30 will gain another 6.7 percent to $14 a bushel by June. China signed deals in the week ended February 17 to buy 13.4 million metric tons from the U.S., about what its own farmers grow in a year. The U.S. Department of Agriculture anticipates record global exports in 2012. Demand for soybeans increased at almost four times the pace of population growth in the past decade, government data show. The oilseed’s gains contrast with outlooks for wheat and corn, with the United Nations forecasting record supplies of cereals this year in response to prices that more than doubled since 2005. Soybean futures in Chicago fell to a 14-month low in December, spurring U.S. farmers, the world’s top growers, to consider switching more land to grains just as drought curbed harvests in South America, the largest producing region. Meanwhile, U.S. production may increase more than forecast as higher prices discourage growers from switching to corn. While farmers can still make about $128 an acre more from corn, that compares with $215 in November. The November soybean contract, reflecting anticipated prices after the U.S. harvest, now costs 2.3 times more than December corn futures, up from a ratio of 1.99 in November. Drought in South America, where farmers are harvesting this month, caused irreversible crop damage and will reduce global production by 7.2 percent, Hamburg-based research company Oil World said in a report. The Rosario Cereals Exchange cut its forecast of Argentina’s crop on Feb. 23 by 10 percent from its January estimate.
