May 23, 2012

As more crops are destroyed by the drought, Argentina's 2012 soy crop could drop to as low as 40 million tonnes from 49.2 million tonnes the previous year, Hamburg-based oilseeds analysts Oil World said on Tuesday (May 22).

This would be down from Oil World's previous forecast of 41.0 million tonnes. Oil World had cut its Argentine crop forecasts by 4.0 million tonnes in April because of dry weather in the country.

"The soybean crop is in trouble in northern Argentina," Oil World said. It estimates that about 0.5 million hectares of soy plantings in north Argentina have been abandoned after dry weather following abandonment of 0.4 million hectares in other parts of the country.

"It is thus possible that the total Argentine soybean crop turns out at only around 40.0 million tonnes compared with our May 4 estimate of 41.0 million tonnes," it said.

The Buenos Aires Grains Exchange on May 17 cut its forecast of Argentina's 2012 soy crop by 1.4 million tonnes to 41.5 million tonnes.

Argentina is the world's third-largest soy producer after the United States and Brazil. Estimates of South American soy production continue to shrink as farmers harvest the remainder of the southern hemisphere crop, a factor driving down forecasts for US and global inventories and supporting prices.

"Consumers in China and elsewhere have an interest in extending (supply) coverage in view of the still dwindling South American soybean production estimates and the vagaries of weather and crop prospects in the US still lying ahead," Oil World said.

China will import 57.0 million tonnes of soy in Aug. 2011/July 2012, up by 3.9 million tonnes on the same year-ago period, Oil World estimates.