IGC cuts U.S. soybean output
International Grains Council has slashed its U.S. soybeans output forecast for 2012-13 by 9.5% to a five-year low of 79 million tons as a severe drought is wilting the crops in the Midwest.
Production was estimated at 83.2 million tons in 2011-12 and is projected to fall for the third successive year.
IGC also cautioned that there is potential for further reduction if the weather conditions don't improve soon.
With crops now entering their crucial pod-filling stage, persistent hot and dry weather across much of the Midwest has significantly impacted yield potential, IGC said in its monthly report.
Less than a third of the U.S. soybean crop is in good condition, IGC said citing official government reports.
IGC also lowered U.S. soybean exports forecast for 2012-13 by 12% to 35.5 million tons. Brazil is likely to be world's top soybean exporter, pushing U.S. to the second place.
Brazil may get the top position this year itself as shipments are already up 40% on year during the October-June period.
IGC slashed U.S. soymeal export forecast by 8% to 7 million tons.
Due to lesser U.S. output, IGC also slashed global output forecast for 2012-13 by 3% to 259 million tons. However, at these levels, global soybeans production will still be 9% higher on year, if weather turns favorable in South America after the recent drought.
Output is lower in the U.S. at a time when demand is increasing and global trade is forecast to rise 4% to a record 94.7 million tons.
China with more than 60% share in global trade is driving up demand and imports are likely to rise 4% to a record 59 million tons.
Relatively strong economic growth, and an associated change in dietary patterns towards greater protein content, is giving a push to Chinese demand for animal feed and vegetable oils, IGC said.
Demand from countries such as China amid tight supply is pushing up prices. Near-month soybeans for August delivery on the Chicago Board of Trade hit a record high of $17.7775 a bushel on July 20.
On the positive side, the surge in global prices will likely spur larger plantings in South America and coupled with a return to at least average yields, production in the region is expected to rebound, by at least one-fifth, to around 140 million tons in 2012-13, IGC said.
Global soymeal trade is likely to be little changed on year around 57.5 million tons. Imports by the European Union, world's top importer are forecast unchanged at 22.7 million tons but much lower than 2007-08 record of 25.4 million tons.
Write to Sameer C. Mohindru at email@example.com
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(END) Dow Jones Newswires
July 27, 2012 10:32 ET (14:32 GMT)