Crop prices recovered from early losses as cracks emerged in the upbeat picture for South American prospects, with Oil World cutting its soybean forecasts, and Argentina to receive more unwanted rains.

Oil World revised to 54.0m tonnes its forecast for Argentina's 2012-13 soybean harvest, a figure which while still representing a bumper crop represented a downgrade of 2.0m tonnes.

The estimate was also below the US Department of Agriculture's 55.0m-tonne figure.

Oil World also trimmed by 1.0m tonnes to 81.0m tonnes its forecast for Brazilian production, a figure in line with USDA thinking.

'Locally-strong thunderstorms'

The revisions reflected fresh fears for the impact of sowings being hampered by dry weather in Brazil, and overly wet weather in Argentina, which have been given fresh traction by latest weather reports.

A wave of rains in Brazil proved, at 0.5 inches at best, "less than expected", broker  US Commodities said, flagging anew "concerns over the Argentina weather being too wet" too.

Indeed, in Argentina "heavy rainfall is predicted Wednesday night and Thursday with a strong wave of low pressure", Gail Martell at Martell Crop Projections said, adding that "at least 1-1.5 inches of rain is expected but 2-3 inches in locally-strong thunderstorms".

And this at a time when, "while the topsoil is begun drying out in November, sodden fields may not support heavy farm equipment", thanks to October rains which were more than double average levels.

'Pricing for perfection'

The poor weather has been viewed as more of a threat to corn, which has an earlier planting window, than soybeans - which have been seen as potentially gaining area as result of the poor weather, as farmers switch crops.

Michael Cordonnier, the noted commentator on South American crops, is pegging the Argentine corn harvest at 22.5m tonnes – well below the USDA's 28.0m-tonne figure.

Oil World said: "So far the [soybean] 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."

However, the fresh setbacks have revived ideas of injecting some risk premium back into prices.

"The market has been pricing for perfection in South America, which is looking less likely, even if there is no reason yet for any serious concern," a UK trader said.

'Severe depletion'

The concerns fuelled a recovery in Chicago soybean futures from early losses to stand up 1.2% at $14.11 ½ a bushel at midday local time (18:00 UK time) for January delivery.

Indeed, Oil World cautioned that the market may have been too quick to cut US prices in response to promising South American crop conditions.

"The recent pace of US soybean exports and crushings also exceeded expectations and will result in a severe depletion of US soybean stocks by early 2013," the Frankfurt-based group said.

"It may thus be a risky policy to bet on strong price pressure from large South American crops already today."

Chicago corn for December was 0.7% higher at $7.44 a bushel, and December wheat up 0.6% at $8.46 ¾ a bushel.