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Brazil Soybean Forecast Lowered on Yields, Oil World Says

March 6 (Bloomberg) -- Brazilian soybean farmers will collect 68 million metric tons of the oilseed in 2011-12, down 0.7 percent from a forecast last week, as dry weather during growing and disease cut yields, Oil World said.

A fungal disease that’s the worst in four years will curb production after the dryness slashed yields, the Hamburg-based researcher said today in a report. Output forecasts were cut in the states of Parana and Rio Grande do Sul as rain was too late to save plants, the researcher said. Output will fall 9.7 percent from last year.

“Crop reports from Brazil and Paraguay are alarming, with yields obtained smaller than expected,” Oil World said. “In Mato Grosso too much rainfall, lack of sunshine and widespread infestation with the Asian rust fungus will sizably reduce yields below last year’s.”

Soybean futures on the Chicago Board of Trade have gained 10 percent this year as the dry weather cut yield projections. The price gained 10 straight sessions through March 2, the longest winning streak since July 15.

Output in South America’s four main producers will fall to 120.9 million tons this year, Oil World said. That’s down from 124.2 million tons forecast on Jan. 27.

Farmers in Paraguay will collect 4.2 million tons, about half what they harvested in 2010-11, according to the report. Oil World raised its outlook for the Argentine crop 1.1 percent to 47 million tons from the Jan. 27 outlook.

“Despite the improved outlook for Argentina, soybean production will decline steeply in South America,” the researcher said. “The supply tightness of the current season will spill over into the first half of the 2012-13 season.”

To contact the reporter on this story: Tony C. Dreibus in London at tdreibus@bloomberg.net.

To contact the editor responsible for this story: Claudia Carpenter at Ccarpenter2@bloomberg.net.

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