South American drought spreads to Brazil

March 23, 2012 – BRAZIL – Drought has spread from Argentina and Paraguay to Brazil and is hitting soy yields at a time of concerns that regional economic growth may suffer as pressures mount on commodity prices. Argentine yields of soy were affected by drought and labor disputes in that country are making farmers and grain traders jittery. Drought caused widespread economic dislocation in Paraguay, which was also hit by cattle disease. Analysts said drought-related developments in Brazil had led to lower yield estimates, slicing about 2.8 million tons off an original estimate of 67.1 million tons for this year’s harvest. The revised estimates are subject to further review, said the analysts. Soy oil has gained importance in the energy market as a feedstock for the booming international bio-fuels sector. Soy produced by Brazil, Argentina and Paraguay accounts for about half the world’s soy exports. Although current worries have caused spikes in prices and buoyed futures trade in Chicago, Latin America and elsewhere, underlying worries over the eurozone crisis and an economic slowdown in China continue to cloud the outlook. Some analysts predicted a 10 million ton shortfall in Brazil’s soy crop when compared with last year. –Terra Daily