Doubts grew over downbeat forecasts for South American soybeans even as Oil World forecast that the region's drought could drive a record drop in world output, helping futures hit a five-month high.
Oil World said that world soybean output would fall be a "staggering" 19m tonnes in 2011-12 to "only" 246.5m tonnes, "the biggest year-on-year reduction ever registered".
The current record drop, of 15.8m tonnes on US Department of Agriculture data, was set four seasons ago, when high corn prices prompted many farmers to switch from soybeans, sending sowings in the US, the top grower, to their lowest in more than a decade.
And the forecast by German-based Oil World implies a further downgrade by the USDA, which currently sees the world harvest this season falling by less than 13m tonnes to 251.5m tonnes.
Downgrades
The deterioration reflects poor conditions in South America, where drought cut prospects in Argentina, Paraguay and in the south of Brazil, all major exporting countries, all of whose harvests Oil World has downgraded this month.
On Monday, Brazil's soybean crop was downgraded by 1.1m tonnes to 69.9m tonnes by Agroconsult and by 2.2m tonnes to 68m tonnes by Agrural. The previous harvest hit 75.5m tonnes.
And in Argentina, the Rosario grains exchange on Thursday slashed its estimate for the domestic harvest by 5m tonnes to 45.5m tonnes.
The country's crop last year came in at 49m tonnes.
Some analysts are expecting the USDA, in its next monthly Wasde report on world crop estimates, to cut "as much as 10.0m tonnes" from its forecast for Argentine, Brazilian and Paraguayan production" broker Benson Quinn Commodities said.
"This could take global ending stocks to near 50.0m tonnes without demand cuts, which if realised would be the tightest global soybeans stocks since 2008-09."
'Emotion gets the best of some'
However, in Brazil, crop consultant Kory Melby urged caution over accepting downbeat forecasts.
"Some of the lower numbers are overdone in my opinion. Emotion tends to get the best of some, both to the upside and downside," Mr Melby said.
And Gail Martell, at US-based Martell Crop Projections, said that the Argentine crop could yet reach 51m tonnes thanks to rains of four-to-six inches in many areas since late January, with 50m tonnes a "realistic" forecast.
"Drought-breaking, drenching rain has stabilised soybeans in Argentina, even improving yield potential in some areas of the central grain belt," Ms Martell said.
And "more heavy rainfall", of perhaps one-to-two inches, is expected this week.
While a "favourable soybean yield is out of the question", with drought having cut pod counts on soybean plants, "heavy late-summer rainfall would increase pod-filling".
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