March 7, 2012

Brazil's 2012 soy crop forecast has been cut by 1.5 million tonnes to 68 million tonnes by Oil World because of drought, it said on Tuesday (Mar 6).

Brazil's crop will be well down on the 75.3 million tonnes it harvested in early 2011. Global grain markets are awaiting a key USDA forecast of Brazilian and Argentine crops on Friday, with lower South American harvests likely to transfer demand to the US

"Crop reports from Brazil and Paraguay are alarming with yields obtained smaller than expected," Oil World said.

Brazilian crops had suffered from drought and recent rainfall came too late in some areas while in the important production region of Mato Grosso too much rain and lack of sun is causing the Asian Rust fungal infection which will cut yields, it said.

Oil World had previously cut its forecast of Brazil's 2012 crop on February 14 to 69.5 million tonnes from 70 million tonnes estimated on January 31 and 72.8 million it forecast in December.

On Monday, Brazilian crushing industry group Abiove cut its estimate for Brazil's crop to 69.5 million tonnes while Brazilian grains analyst Celeres lowered its estimate to 69.8 million tonnes.

The US is the world's largest soy producer followed by Brazil with Argentina in third place.

"In Argentina, very beneficial rainfall has stabilised soy production prospects," Oil World said. It is retaining its forecast of Argentina's 2012 soy crop of 47 million tonnes, down on the 49.2 million tonnes harvested in 2011 in Argentina.

Oil World currently forecasts Paraguay's soy crop at 4.6 million tonnes, down from 8.3 million tonnes harvested last year.