March 21, 2012

Oil World lowers Brazil, Argentine soy crop predictions

Brazil's 2012 soy crop projection was reduced by 1.5 million tonnes to 66.5 million tonnes, compared with 75.3 million tonnes in 2011, said Hamburg-based oilseeds analyst Oil World on Tuesday (Mar 20).

Oil World also reduced its forecast of Argentina's 2012 crop by 0.5 million tonnes to 46.5 million tonnes, down from 49.2 million in 2011.

It cut its forecast of Paraguay's crop by 0.6 million tonnes to 4.0 million tonnes, down from 8.4 million tonnes in 2011.

"New damage (came) in the first half of March from very dry and hot conditions in southern Brazil and northern Argentina," Oil World said. "On top of that, the Brazilian states of Mato Grosso and Goias have reported damage from Asian Rust fungus, the worst in more than five years."

The United States is the world's largest soy producer followed by Brazil with Argentina in third place. US soy prices touched new six-month highs on Friday (Mar 16) and Monday (Mar 19) on expectations drought damage to South American soy harvests would transfer global import demand to the United States.

"Demand for US soy has clearly benefited from the downward revisions of South American crop estimates in recent weeks," Oil World said.

Oil World had also cut its forecast of Brazil's 2012 soy crop by 0.5 million tonnes on March 6. In December 2011 the analyst had put Brazil's upcoming crop at 72.8 million tonnes.

Oil World's forecasts compare to the USDA's March 9 estimates of 68.5 million tonnes for Brazil and 46.5 million tonnes for Argentina.

Oil World now estimates global 2011/2012 soy production will fall to 243.2 million tonnes from 265.8 million tonnes in 2010/11 largely because of the South American harvest problems.

"It remains to be seen to what extent the recent price uptrend is going to slow down the demand growth," Oil World said. "No doubt, a decline in world production of soy in the vicinity of 22-23 million tonnes is necessitating a certain amount of demand rationing."