Early ideal growing conditions support ideas that the South American soybean crop could be much bigger than a year ago. [DTN graphic by Pat Hill]

We're seeing a lot more focus on South America soybean production in market comments as we get ready to enter the new year.

DTN South America Correspondent Kieran Gartlan is providing subscribers with an in-depth review of planting progress in Brazil.

Gartlan reported Monday that Brazil is enjoying near-perfect growing conditions so far this year, and that may boost early-season bean yields, which typically are less than the longer-season varieties. The big agronomic concern is rust, with a lot bigger infestation reported. For the markets, Brazilian farmers are hurt by the strong currency, which makes their crop relatively less valuable. Gartlan quoted the local consultancy AgRural, which said, "Even if farmers in Mato Grosso produce record yields of 47 bushels per acre this season, current prices of around $10 per bushel in Chicago and an exchange rate of R$1.70/dollar, mean farmers will lose $13 an acre. An exchange rate of R$2.00/dollar would give them a profit of around $70 per acre."

U.S. soy analyst and specialist in South America Michael Cordonnier in his latest newsletter said early season beans are already being harvested in Mato Grosso. As Gartlan also said, those early beans typically have lower yields, but Cordonnier said some of that is offset by a lower cost of production, since the shorter growing season may reduce need for fungicide. And getting the crop out sooner makes the land available for double-cropping with corn or cotton.

While early bean harvest is under way in Mato Grosso, there is some 35 percent left to plant in Rio Grande do Sul, Gartlan said -- a frustration for farmers facing delays from soggy fields (sound familiar?), but probably not a concern at this time.

As far as the size of the crop, there seems to be a consensus that there will be a much bigger crop coming from South America this year than last year, assuming continued favorable weather. In December, USDA projected Brazil at 63 million metric tons and Argentina at 53 MMT, up from 57 MMT and 32 MMT a year ago. Estimates in Brazil are now a little higher, ranging around 64.0 to 64.8 MMT, Gartlan said. Cordonnier said he's now expecting Argentine production at 50 MMT.

Whatever the numbers, the market will need to adjust for the added supplies as they come to harvest in the next few months.

See Gartlan's articles in DTN Ag News.

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