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January 11, 2012

Soy in Paraguay Impacted by Dry Weather, Estimates Declining

Paraguay doesn't get much attention, but it is the third leading soybean producing country in South America. Nearly all the soybeans in Paraguay are grown in the southeastern part of the country just across the border from the Brazilian states of Parana and Santa Catarina. As we have been reporting for weeks, the weather in western Parana and western Santa Catarina has been very dry with some areas going 45 days without a rain and soybean yields being reduced as much as 30%. The situation is very similar just across the border in southeastern Paraguay. In fact, the majority of the soybeans in Paraguay are produced by Brazilian farmers who moved across the border in search of cheaper land to expand their operations.

The 2011/12 growing season started off quite well in Paraguay and the 2011/12 soybean crop in Paraguay was planted very quickly. Unfortunately, the conditions started to deteriorate in November and December and as a result, crop estimates in the country have declined as well. The early maturing soybeans in Paraguay are now filling pods so the dry weather came at a very inopportune time.

Soybean yields in Paraguay set a record last year at 2,922 kg/ha (42.3 bu/ac), but if we look at the average yield for the last four years, excluding the drought plagued growing season of 2008/09, the Paraguayan soybean crop averaged 2,722 kg/ha or 39.5 bu/ac. During the last two drought years in Paraguay, which was 2008/09 and 2005/06, the soybean crop in Paraguay averaged 1,578 kg/ha or 22.9 bu/ac.

At the start of the growing season we had estimated that Paraguay would produce 8.5 million tons of soybeans, but that estimate was reduced last week and it is being reduced again this week. Currently, the Paraguayan soybean crop is estimated at 7.2 million tons, which is a 0.5 million ton reduction from last week. That would put the total reduction thus far at about 15% lower than initial estimates at the start of the growing season.

The early maturing soybeans in Paraguay should have the lowest yields and the later maturing soybeans could still recuperate if there several heavy rains across the country over the next two weeks.

Most of soybeans produced in Paraguay are eventually exported out of either Argentina or Brazil. The soybeans exported out of Argentina are barged down the Parana River to export facilities in Rosario. The soybeans exported out of Brazil are trucked across the state of Parana to the Port of Paranagua.