April 10, 2012 / 12:43 PM / 8 years ago

UPDATE 3-Drought punishes Brazil soy crop; corn crop surges

* Ministry's soy forecast below many private analysts
    * Winter crop corn output seen surging 35 pct
    * Drought ravaged yields in main southern soy states

 (Adds details on yields, area, byline)	
    By Reese Ewing	
    SAO PAULO, April 10 (Reuters) - Drought blighting Brazil's
soybean crop sliced more than 3 million tonnes off the
government's 2011/12 estimate on Tuesday and will buoy futures
prices for the key source of protein and livestock feed by
trimming exports.	
    Soy output from the No. 2 producer after the United States
will fall to 65.6 million tonnes this season, which is weeks
away from finishing harvest, despite the 3.4 percent expansion
in area to a record 25 million hectares (62 million acres).	
    The new output number marks a sharp drop from the 68.7
million tonnes forecast in March and the record 75.3 million
tonnes harvested a year ago, the agriculture ministry's crop
supply agency Conab said.	
    The toll taken by dry weather associated with La Nina over
South America's main soy crop showed up in the yields. Average
productivity fell to 2.624 tonnes a hectare, nearly 16 percent
below last year's record of 3.115 tonnes per hectare. 	
    The lack of rain was most acutely felt in the southern
producing states of Rio Grande do Sul and Parana, the third and
second largest producers of soy in Brazil respectively.	
    Rio Grande do Sul's output is due to plummet 44 percent to
6.5 million tonnes this season from last year's record 11.6
million due to the drought that started in November there and
has largely continued until now, Conab said.	
    Parana state would not fare much better with output expected
to plunge 36 percent to 9.9 million tonnes from a record 15.4
million last year.	
    	
    MARKET VIEWS	
    Conab's monthly estimate was the lowest of the previous six
so far this season and came in below most other market views. 	
    See a factbox of recent forecasts: 	
    Global food prices rose in March for a third straight month
with more hikes to come, the U.N.'s food agency said on
Thursday, adding to fears of hunger and a new wave of social
unrest in poor countries. 	
    On Tuesday, the U.S. Department of Agriculture also lowered
its estimate of the Brazilian crop, to 66 million tonnes from
the 68.5 million tonnes it projected in March. 	
    And Hamburg-based Oil World dropped its forecast to 65.5
million tonnes from last year's 75.3 million. 
Both lowered their views for Argentina's soy output as well.	
    Soybean exports from Brazil were expected to fall to 31.2
million tonnes from 32.4 million tonnes shipped in 2010/11,
Conab said.	
    Drought has plagued southern soy producing regions in Brazil
as well as Argentina and Paraguay, which all together account
for more than half the world's soybean trade. La Nina is a
cooling of equatorial Pacific waters that typically leads to
drought in the Southern Hemisphere.	
    Chicago soybean futures have risen more than 31
percent since mid-December when it became clear that drought was
going to hurt the South American crop.	
    Brazil's soy harvest is nearly complete with all the main
producer states finished except Rio Grande do Sul. Future
adjustments to Brazil's soy output estimates will likely be less
dramatic as most of the growing regions have registered fairly
complete data, analysts say. But Argentina is still has most of
its crop to harvest.	
    	
    CORN	
    Despite the roughly 10-million-tonne drop in soybean output
from last year, local producers were pushing their second, or
winter, corn crop plantings into record territory.	
    Brazil's total corn production from the 2011/12 crop was
forecast at a record 65.1 million tonnes, Conab said, up from
61.7 million tonnes forecast in March and up sharply from the
57.4 million tonnes harvested in 2010/11.	
    The main summer crop corn that is about 70 percent harvested
is expected to be barely larger than last year's summer crop
despite the 8.4 percent jump in planted area. Corn grows in the
same fields as soy and yields dropped 7 percent this year to
4.21 tonnes a hectare due to the drought.	
    The winter crop corn is expected to reach a record 29
million tonnes, up 35 percent from last year, which was hurt by
an early end to the rainy season. Yields are forecast to rise
12.5 percent due to better rains, investments in fertilizer and
seeds. Area has expanded by 20 percent to 7 million hectares.
The winter crop is almost done planting.	
    Corn exports were forecast to reach 10 million tonnes this
year, up from 9.5 million last season, Conab said.	
    Brazil became the world's third largest exporter of corn in
the past few years.	
	
 (Editing by John Picinich)
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