Argentina, Brazil seen to get big soy crops

Hamburg-based oilseeds analyst Oil World on Tuesday (Jan 19) raised its forecasts of soy crops in key South American producers - Argentina and Brazil - as larger harvests could pressure prices.

Argentina is now forecast to harvest 51.0 million tonnes in early 2010, up from Oil World's December estimate of 48.0 million tonnes and a sharp increase from the drought-reduced 32 million tonnes in early 2009.

"Soy prospects have greatly improved following abundant rainfall in recent weeks in most of the (Argentine) soy growing areas," it said. But it did not agree with some local Argentine crop forecasts of up to 53 million tonnes and above as delayed plantings and poor seed quality could cut yields, it said.

Brazil's early 2010 soy crop is forecast to reach 64-65 million tonnes, up from Oil World's December estimate of 63.7 million tonnes and up from 57.4 million tonnes in 2009.

Brazilian prospects are also favourable although considerable concern remains about the impact of the Asian Rust crop fungus, it said.

Meanwhile, smaller producers are also likely to achieve larger soy crops. Paraguay is forecast to harvest a record 6.9 million tonnes in early 2010 from 3.0 million tonnes in early 2009, it said. Uruguay is forecast to produce 1.7 million tonnes from 0.54 million tonnes in early 2009.

Meanwhile, the looming crops could put downward pressure on global soy prices, Oil World said.

"The much improved South American soy crop prospects are currently fuelling a bearish sentiment, which could result in additional sizeable declines in soybean prices," it said.

But several factors could still limit South American crop growth, especially deteriorating weather in Brazil which made it hard to apply fungicides on crops threatened by Asian Rust.