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