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Veteran Advisor

A little feed for the soy bulls

Argentine soybean forecast cut as La Nina bites

Persistent dry weather in Argentina has prompted Oil World analysts to ditch their sanguine position on the country's soybean crop, warning of a "rapid" deterioration and cutting their production forecast.

The influential analysis group, which two weeks ago said that the dry start to Argentina's main soybean season was "not yet alarming", warned that a continued lack of rainfall was now taking its toll.

"Argentine soybean crop prospects are now deteriorating at a rapid pace," Oil World said.

"It is still much too dry in the major Argentine soybean and corn belt."

The group cut its forecast for the crop in the world's third-ranked soybean exporter by 1.5m tonnes to 50.5m tonnes, and warned that further downgrades may be in the offing if rains are not forthcoming.

'Increasing stress'

A crop at the forecast level would represent a drop of 3.9m tonnes year on year, and is lower than the 52.0m-tonne estimate outlined on Friday by the US Department of Agriculture, whose data set global benchmarks.

However, the downgrade comes amid growing fears for the impact that the current La Nina weather pattern, which has a history of bringing dryness to Argentina, may cause.

Argentina's Rosario grains exchange last month broke ranks with other forecasters by estimating a crop of 49.5m tonnes, despite a rise in sowings to a record 18.7m hectares.

And analyst Michael Cordonnier, at Soybean and Corn Advisor, two weeks ago cut his estimate of the Argentine crop by 2m tonnes to 50m tonnes, citing the dearth of rain.

Meteorlogix forecasters on Tuesday predicted dry weather in Argentina for the rest of the week, noting "increasing stress to [crops] across central and eastern portions of the soybean belt".

"Soil moisture is being depleted across southern areas," the meteorological group said.

Brazil improvement 

However, Oil World raised its hopes for the harvest in Brazil, the world's second ranked soybean grower and exporter, where La Nina has been associated with better rains, especially in more northerly areas.

"Rainfall and growing conditions have improved considerably in most of Brazil with the main exception of the southernmost state of Rio Grande do Sul," Oil World said.

The crop now looked on track to hit 67.3m tonnes, 500,000 tonnes more than previously expected, if below last year's 68.7m-tonne crop.

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Veteran Advisor

Re: A little feed for the soy bulls

We could be heading in to a year of extremes. We already have a smaller than average corn crop inventory and huge demand for a what was a decent soybean crop. If we end up with a very dry summer will we be the next country to stop exports of grain? The livestock guys may want to find a way to lock in some large amounts of grain if the market ever slows down for them. If history repeats itself with this La Nina we could be in for a wild market unlike most have ever seen and the world could become a very hungry place!

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