South American Soybean Prospects Improving

It's not just the big two of Brazil and Argentina likely to weigh in with record soybean production in South America in 2010.

Minnows like Paraguay and even Uruguay could also see output boosted to all-time highs following increased plantings and beneficial rainfall.

The USDA yesterday left their production estimate for Paraguay unchanged at 6.7 MMT, just below 2007/08's record output of 6.9 MMT, but some analysts think that the crop there could reach 7 MMT. "Very high yields may be obtained in the region of Alto ParanĂ¡," say Oil World.

As in Argentina, last year's Paraguayan soybean crop was badly affected by drought, slashing production to just 3.9 MMT. Output this year could see an 80% increase on that.

“2009 was a lost year for agriculture but results for 2010 could be very promising," says Paraguayan agronomist Hector Cristaldo.

Oil World predict that even little Uruguay could chip in with a record 1.7 MMT of soybeans this year, up almost 50% from 1.16 MMT last year.

Sound familiar? High prices equal big plantings as every pauper and his dog look to cash in, throw in some decent El Nino-influenced rains and lo and behold we have record production all over the place. Just like wheat in 2008.