April 4, 2012
Oil World said on Tuesday (Apr 3) that Argentina and Brazil's soy crops have suffered from more poor weather and harvest forecasts for the two countries may have to be cut by a combined 2-3 million tonnes.
"New reports have been received confirming additional crop losses, further eroding the potential South American export supplies of soy and products," Oil World said.
"The South American supply situation could really become serious and exports of soy and products may be forced to decline significantly in Sept. 2012/Jan. 2013."
There are new indications that drought in parts of Argentina has created irreversible soy crop damage, it said.
On March 20 Oil World had reduced its forecast of Argentina's 2012 soy crop by 0.5 million tonnes to 46.5 million tonnes, down from 49.2 million in 2011.
The US is the world's largest soy producer followed by Brazil with Argentina in third place.
"We may be forced to shave 1-1.5 million tonnes off our Argentine soy crop estimate," Oil World said.
On March 20 Oil World also cut its forecast of Brazil's 2012 soy crop by 1.5 million tonnes to 66.5 million tonnes compared with 75.3 million tonnes in 2011 because of drought and crop fungus.
Oil World said there is a risk it may have to cut the Brazilian estimate by a further 1.0-1.5 million tonnes because of low yields achieved so far in Brazil's harvest after drought.
US soy prices touched new six-month highs on March 26 on expectations drought damage to South American soy harvests would transfer global import demand to the US and rose again on Friday following US planting estimates.
"The additional (South American) supply reductions are likely to keep soy prices well supported and probably trigger a renewed upturn in coming weeks," Oil World said.
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