April 11, 2012

Oil World slashes Argentina, Brazil's 2012 soy crop forecasts

After poor weather cut yields, Oil World said on Tuesday (Apr 10) it has cut its forecast of Argentina's 2012 soy crop by 1.5 million tonnes and of Brazil's crop by one million tonnes.

The latest forecasts were down from Oil World's March 23 estimates following continued drought in Argentina coupled with damage to Brazil's harvest from storms and crop fungus.

"World supplies of soy have become much tighter following repeated downward revisions of this year's South American production," Oil World said.

US soy prices touched seven-month highs on Thursday (Apr 5) on expectations drought damage to South American soy harvests would transfer global import demand to the US.

Oil World now forecasts Argentina's 2012 soy crop at 45.0 million tonnes, down from 49.2 million in 2011. Brazil's crop is forecast at 65.5 million tonnes from 75.3 million tonnes in 2011.

The US is the world's largest soy producer followed by Brazil with Argentina in third place. The expected poor South American crops mean global 2011/12 season soy output will fall to 240.42 million tonnes from 265.76 million tonnes in 2010/11, Oil World estimates.

"This will raise the global dependence on US soy and products in the first half of next season," it said.

Poor South American harvests will in turn mean the US will need favourable weather and above average yields to meet global demand, it said.

US farmers will also have to increase soy plantings by at least 2-3 million acres (0.8 to 1.2 million hectares) above the area indicated by US planting intentions on March 30, it said.