Agriculture • Oil World downgrades Argentine soybean crop, again
Oil World downgrades Argentine soybean crop, again
Oil World has, for a fourth successive week, cut its forecast for the soybean crop in Argentina, extending the run of downgrades to a crop hurt by both frost and drought.
The influential analysis group downgraded by 1.5m tonnes to 41.0m tonnes its estimate for the 2011-12 harvest in the third-ranked exporter of the oilseed.
The revision, which puts an 8.2m-tonne drop from last season on the cards, takes to 4.0m tonnes Oil World’s total downgrades to the crop over the last month.
And it extends a trend which has seen some observers come up with even smaller forecasts.
"The market is still trying to dial in a shrinking Argentine crop. Some estimates now have the crop below 40m tonnes," broker US Commodities said.
Michael Cordonnier at Soybean and Corn Advisor said: "The Argentine soybean production continues to decline on nearly a weekly basis due to late season dryness in northern Argentina and cold weather and patchy frosts in southern Argentina."
More downgrades to come?
Indeed, further downgrades may be yet to come, to judge by comparison with 2008-09, when Argentina last suffered a drought-dented harvest.
Then, the US Department of Agriculture, whose data represent world benchmarks, in 2009 cut its forecast for the Argentine harvest into June, by a total of 7.0m tonnes from April.
Soy bean production in neighbouring Brazil may also be due further downgrades, although with the harvest just about finished, there is less scope for cuts.
Oil World said that it may reduce its estimate for the Brazilian crop by 500,000 tonnes to 65.0m tonnes.
Buyers switch to US
The German-based group restated forecasts that the disappointing South American harvests would boost demand for soybeans from the US, the biggest exporter.
"With South American supplies dwindling, world demand for soybeans and products will increasingly shift to US origin from June and July onward it," Oil World said.
Such a trend "will limit the downward potential of soybean and product prices in the near-to-medium term".
Statistics: Posted by yoda — Tue May 08, 2012 12:48 pm
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