Soy supply woes eased by South American crop

An expectedly large South American soy crop in early 2010 will relieve tight world supplies and pressure global prices.

According to Hamburg-based oilseeds analysts Oil World, soy prices are set to come under considerable pressure in the next three to six months if expectations of a large South American crop materialise.

Oil World now forecasts key exporter Argentina's crop in early 2010 will rise to 48.0 million tonnes from the drought-reduced 32.0 million tonnes in early 2009. Brazil's crop is forecast to rise to 63.7 million tonnes from 57.4 million tonnes.

Paraguay is likely to harvest 6.7 million tonnes, sharply up from 3.9 million tonnes this year.

Along with smaller producers this would raise the southern hemisphere crop to 123.13 million tonnes, from 97.22 million tonnes in early 2009.

Oil World said that after two consecutive years of insufficient production, relief is in sight with world soy production set to rise sharply in the second half of this season. But uncertainties remained, especially weather.

It was still uncertain whether planting intentions could be carried out in Brazil as it was currently too wet in the Rio Grande do Sul soy region. In Argentina, it was still too dry in some western and southern soy regions which could hit yields.