Although it is estimated that the soy trade in Asia should not be disrupted by a fungus problem in Brazil, "buyers are watching nervously as another woe threatens South American supply prospects".

According to a report by World Agriculture Online , the devastating Asian rust fungus, which reduces the size and yield from soybeans, has been found in at least four of Brazil's main farm states, as neighbouring Argentina, itself no stranger to fungus problems, reels from a financial crisis.

"To make matters worse, the government in Buenos Aires said last week it was probing a suspected foot-and-mouth outbreak, although initial tests have come back negative." The report quotes a Singapore-based trader as saying that "It seems that supplies from South America are cursed. In Argentina, first it was the currency woes, then it was the farmers' strike and now it is the fungus and the talk of foot-and-mouth."

Agriculture Online reports that regional traders are expecting Asian soy business to slow in coming weeks, attributing this mainly to high Chicago prices and low availability from Argentina, where farmers are holding on to their produce in hope of getting higher prices. Brazilian soybeans are being offered at US$221 a tonne C&F Southeast Asia for July shipment, while US number two beans are offered at US$222 a tonne.

"I don't think the fungus problem is going to slow down South American business to Asia unless it turns out to be a very big problem, which I doubt," John Lindblom, regional director for Southeast Asia of the American Soybean Association, was quoted in the report.

By Aaron Priel, just-food.com correspondent