April 18, 2012

Oil World slashes Argentinean, Brazilian soy crop forecasts

After drought damaged harvests, Oil World on Tuesday (Apr 17) said it had cut its Argentina's 2012 soy crop forecast by one million tonnes and that of Brazil by 0.5 million tonnes.

Oil World now forecasts Argentina's 2012 soy crop at 44.0 million tonnes, down from 49.2 million in 2011. Brazil's crop is forecast at 65.0 million tonnes from 75.3 million tonnes in 2011.

The latest forecasts were further reduced from Oil World's April 10 crop estimates which had also been cut by a combined 2.5 million tonnes for the two countries as the lingering impact of dry weather becomes clearer.

The estimates compared to the USDA's forecast on April 10 of a 45.0 million tonnes soy crop for Argentina and 66.0 million tonnes for Brazil. Local observers in Argentina and Brazil have also cut soy crop estimates.

The poor South American crops mean global 2011-12 season soy production will fall 26.6 million tonnes on the year to 239 million tonnes, Oil World estimates.

"The magnitude of this decline is unprecedented," Oil World said. "This is going to reduce world soy stocks more sharply than expected by end-August 2012."

"The tightness is going to spill over to at least the first of the world crop season 2012-13, when a sharp decline in South American exports will raise the dependence on US supplies."

World April-September 2012 soy crushings are likely to be smaller than anticipated which will keep prices of soymeal and soyoil well supported, Oil World said.