Paraguay could triple soyoil output, exports in 2013

Wed Feb 22, 2012 3:46pm EST

* South American nation is distant No. 4 soy exporter

* Industry hopes crushing will take off as plants open

* Crushing vol could rise to 4 mln T from about 1.2 mln

* Exports could rise to 760,000 T from about 250,000 T

By Didier Cristaldo

BUENOS AIRES, Feb 22 (Reuters) - Paraguay, the world's fourth-biggest soybean supplier, could triple its production and exports of soyoil next year when two large processing plants come on line, industry analysts said on Wednesday.

The South American country, which currently exports most of its soy as raw beans, could crush up to 4 million tonnes in 2013 when Archer Daniels Midland, Bunge and Louis Dreyfus are set to start operating their factories.

Drought has battered Paraguay's 2011/12 soy harvest and crushers are expected to process 1.2 million tonnes of beans this year, down slightly from 1.4 million tonnes in the previous bumper harvest.

"With the new plants in place, we're going to exceed 4 million tonnes, which means the soyoil exports should reach 760,000 tonnes," said Jose Vargas Pena, president of the Paraguayan Chamber of Oilseed Processors, or CAPPRO.

That would be a three-fold increase on current soyoil exports of about 250,000 tonnes, although the figure only represents about 10 percent of the soyoil produced last year by Argentina - the world's top supplier of soy products.

Paraguayan growers expect to gather 4.6 million tonnes of soy this year, a decline of 45 percent on the 2010/11 crop year due to the impact of the La Nina weather phenomenon.

Despite this season's poor harvest, soy production has surged in recent years in Paraguay. It still trails far behind neighboring agricultural giants Brazil and Argentina, however.

Both of the new crushing plants, one of which is a joint venture between Bunge and Dreyfus, are being built in the Paraguay river port of Villeta, which lies some 50 km (30 miles) south of the capital Asuncion.

The Bunge-Louis Dreyfus plant will have a processing capacity of 3,000 tonnes per day, which could later be extended to 4,000 tonnes per day. ADM's plant will have a processing capacity of 3,300 tonnes per day.

Vargas Pena said both factories, which required a $300 million investment, will start operating in 2013.

Persistent strong demand for soyoil and high prices could spur large international grains exporters to make further investment in Paraguay's crushing industry, said Fernando Masi, an advisor to the industry minister.

India is the currently the biggest buyer of Paraguayan soyoil, followed by countries including Iran, Egypt and Morocco.

"If all these companies are investing it's because they think the international price is going to stay high," Masi said, estimating that half of the country's soy production would be crushed within four or five years.

Farmer Tranquilo Favero, the country's biggest single producer, said that portion could climb to more than two-thirds of total output.

"The level of investment that's forecast and being implemented by the multinational soy companies shows that in the near future Paraguay could be processing about 70 percent of its soy production," he said. "The outlook is very positive."

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