South America soy crop losses imminent

Argentina and Brazil are facing severe losses in soy crop this year due to continual drought, Hamburg-based oilseeds analysts Oil World said on Tuesday (January 20).

If last minute rainfall fails, markets should be prepared for lower than expected soy supplies and rising prices, it said.

Oil World also said that some parts of Argentina are suffering their worst drought for 50 years and current forecasts do not indicate enough rain to allow plantings to recover.

In northern Argentina, the report said plantings of second-crop soy cannot be carried out and in other more advanced areas the plants are reportedly in such poor condition that unusually large (crop) abandonment is to be expected.

Though Brazil had some rainfall, current crop forecasts are still about two to three million tonnes below initial harvest expectations, it said.

It will probably take another one to two weeks before the extent of South American crop losses can be assessed with some accuracy, it said.

Oil World noted that safety net against crop losses in South America ''is rather thin at the moment.'' Old crop soy stocks in South America are still significantly higher than a year ago, but this is mostly offset by lower stocks in the US, the analyst concluded.