January 18, 2012

Forecasts of soy crops for 2012 in key exporters Argentina and Brazil by a combined 3.8 million tonnes have been cut by Hamburg-based oilseeds analysts Oil World.

The cuts follow drought in parts of South America, which also caused the USDA to reduce crop forecasts for the region. Some recent rain fell in Argentina, but a return to hot and dry weather is again forecast, Oil World said.

Oil World said on Tuesday it had cut its forecast of Argentina's 2012 soy crop to 50 million tonnes from 52 million tonnes it forecast in December.

This would still be up on the 49.2 million tonnes harvested in 2011 in Argentina. Argentina is the world's third-largest soy exporter, with the US the largest and Brazil in second place.

"It is questionable whether a decline in the Argentine soy crop below last year's 49.2 million tonnes can be prevented," Oil World said.

Oil World said it has cut its forecast of Brazil's 2012 soy crop to 71 million tonnes from the 72.8 million it forecast in December. This would be down on the 75.3 million tonnes Brazil harvested in 2011.

Dry weather has also hit crops in other South American countries, Oil World said. Paraguay's 2012 soy crop will drop to six million tonnes from 8.37 million tonnes in 2011, it forecast.

Oil World said it did not agree with USDA forecasts of larger US soy stocks, which caused a slump in prices on January 12.

"World demand for US soy will pick up in coming months and increase more or less sizeably from a year earlier, depending on the extent of the crop losses in South America and the price developments," Oil World said.

It added: "A reduction in South American exports will be inevitable in 2012, raising demand for US soy."