UPDATE 2-Brazil raises soy crop view after aggressive cuts

Thu May 10, 2012 4:17pm EDT

* Brazil soy crop estimate raised from April to 66.7 mln tns

* Corn crop seen up from April at 65.9 mln tns

* Analysts say ministry overdid earlier cuts in estimates (Adds details from report, analyst comment)

By Reese Ewing

SAO PAULO, May 10 (Reuters) - The soybean forecast from Brazil's agriculture ministry on Thursday bounced back by more than a million tonnes, after the government overshot in April when it slashed more than 3 million tonnes from an earlier estimate of the drought parched crop.

The ministry's crop supply agency Conab said in its eighth forecast of Brazil's grain output that the 2011/12 (September-October) soybean crop would reach 66.7 million tonnes, up 1.1 million tonnes from the agency's April estimate of 65.6 million tonnes.

The April estimate had be cut by more than 3 million tonnes from March. Brazil harvested a record 75.3 million tonnes in 2010/11.

"I was fearful of this last month," said agricultural consultant Kory Melby based in Goias. "They dropped it far too fast."

Conab did not give details on why they decided to raise their forecast after dropping it sharply in past months.

Soy futures prices have firmed since December, as markets fear dwindling stocks and strong demand for the important source of protein from China could put pressure on food prices and trigger civil unrest.

Conab said Brazil should export 31.1 million tonnes of soybean, down from the 32.99 million tonnes last year.

Drought that started in November in Brazil's southern grain states, common under La Nina weather patterns, erased over 10 million tonnes from the current crop's potential, considering the expanded area planted with soy this season.

Area planted expanded 3.5 percent from last season to a record 25 million hectares (61.8 million acres), Conab said. But average yields were a dismal 2.665 tonnes a hectare, the lowest in six years.

The southern states took the brunt of the drought. No. 3 soy growing state, Rio Grande do Sul, will put out a dismal 6.5 million tonnes, down 44 percent from the record 11.6 million last season. It is one of the last major states to harvest and it is days away from finishing.

No. 2 soy state Parana harvested 10.8 million tonnes, down 30 percent from the record 15.4 million last season.

Partially offsetting the losses in the south, No. 1 soy state Mato Grosso raised output by 6 percent to a record 21.7 million tonnes and No. 4 producer Goias rose 3.4 percent to 8.5 million tonnes, Conab data showed. The two center-west states have been done harvesting for more than a month.

CORN

Less impacted by the drought, Brazil's corn crop is mushrooming into record territory as firm international prices entice producers to invest more heavily in fertilizers and seed.

Conab said Brazil would harvest a record 65.9 million tonnes of corn, up 15 percent from the 57.4 million tonnes last year. It had forecast the current crop at 65.1 million tonnes in April.

Most of the crop goes to feed the local pig and poultry industry but Brazil has become the third largest exporter of the grain in recent years after the United States and Argentina.

Conab sees corn exports this season at 10.5 million tonnes, up from 9.5 million last year. (Reporting by Reese Ewing; Editing by John Picinich and Marguerita Choy)

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