Oil World cut - again - its forecast for the Argentine soybean
harvest, warning weather had been "critically dry" in many areas, and helping
prices of the oilseed stand firm even as grain futures went into retreat.
The influential analysis group reduced its forecast for the
Argentine harvest by 2m tonnes to 50.0m tonnes - well below the 56.0m-tonne
crop it had initially expected.
The downgrade reflected weather which "has been critically
dry in the past four-to-six weeks on at least 40-50% of the Argentine soybean
area, depleting soil moisture and creating crop stress," Oil World said.
Indeed, it cautioned over "the risk of additional downward
revisions unless the required rainfall arrives in the next one-to-three weeks".
Range of estimates
The revision makes Oil World among the most gloomy
forecasters on Argentine soybean prospects, matching an estimate from the
Buenos Aires grains exchange.
The lowest estimate among a poll of US brokers earlier this
month was 51.0m tonnes, while the US Department of Agriculture pegs the crop at
Although Oil World also nudged its estimate for the
Brazilian crop higher, the uplift of 500,000 tonnes represented only a partial
offset, and helped March soybean futures hold on to gains of 1.9% in morning
deals in Chicago to stand at $14.51 a bushel.
Corn and wheat futures, which had also made headway in early
trading, were 1.0% or more lower.
'In need of rain'
Soybean futures were also helped by talk that rainfall in
Argentina over the weekend had come in short of forecasts, reducing hopes of
trimming damage to dryness.
"The soybeans are finding a strong bid on less-than-expected
rain in Argentina," broker US Commodities said, noting that "coverage was well
under the expected wide coverage".
The disappointing precipitation "leaves about 50% of the area
in need of rain".
Furthermore, hopes of a return by Chinese buyers to
purchasing, following the end of the week-long lunar new year celebrations, were
fulfilled when the country was on Tuesday revealed to purchased 120,000 tonnes
of US soybeans for 2012-13 delivery.