Argentina's soy crop outlook improves

Better weather has improved prospects for Argentina's soy crop in early 2010 although the final harvest outcome is still unclear.

Hamburg-based oilseeds analysts Oil World said that the 2010 soy production prospects have improved and is expecting that the crop will likely turn out above end-November estimate of 48.0 million tonnes.

Argentina harvested 32 million tonnes in early 2009 following a drought.

World soy demand will be increasingly dependent on South American supplies from February-March 2010 and South American crop conditions are likely to move to the centre of global soy price building in coming weeks, Oil World said.

If forecasts of larger South American crops are confirmed, this could push down prices for soy and products in early 2010, it said.

In general, soil moisture levels in major Argentine soy production regions are better than last year but there was too much rain in December in Cordoba, Santa Fe and northern Buenos Aires province, it said.

However, there are also some concerns about Brazil's soy crop, as the Asian rust fungus is becoming a major problem, it said. Heavy rain forecast in Brazil could also cause soy crop deterioration at a late stage of crop development.

It said that Brazilian soy harvesting has started in early areas and farmers in the country are likely to speed up harvesting in coming days to benefit from price premiums for nearby deliveries.

Smaller producer Paraguay is likely to harvest a record 6.7 million tonnes to 6.8 million tonnes of soy in early 2010, up from only 3.9 million tonnes last year, it said.