November 21, 2012

Due to unfavourable weather disrupting sowings in Argentina and Brazil, Oil World has cut its forecasts of 2013 soy harvests in both countries by a combined three million tonnes.

Oil World now forecasts Argentina will harvest 54.0 million tonnes of soy in early 2013, down from 56.0 million tonnes it forecast in October but still up from 40.5 million tonnes Argentina harvested in early 2012.

Oil World forecasts Brazil will harvest 81.0 million tonnes of soy in early 2013, down from 82.0 million tonnes forecast in October but also still up from 66.8 million tonnes Brazil harvested in early 2012.

Soy prices hit record highs in September as drought ravaged the US crop, but slumped to five-month lows on Friday (Nov 16) as the US harvest turned out larger than expected and big South American output may relieve world supplies in early 2013.

But some parts of Brazil are too dry to enable soy sowings while some Argentine plantings have been disrupted by repeated rain, Oil World said.

"So far the market has shown little response to the significant planting delays in Argentina, apparently trusting in the ability of Argentine farmers to accomplish plantings and produce a large crop even under detrimental conditions," it said.

Oil World stressed that global soy stocks are declining and the US can satisfy a somewhat larger share of global soy demand than anticipated two months ago because its crop is larger than feared, Oil World said.

"However, the recent pace of US soy exports and crushing also exceeded expectations and will result in a severe depletion of US soy stocks by early 2013," it said. "It may thus be a risky policy to bet on strong price pressure from large South American crops already today."