Local forecaster Celeres downgraded the size of Brazil's soy crop for a fourth month on Monday as drought damage became clearer, but said further large cuts to the world's No. 2 producer were less likely as the harvest winds down.
Brazil's crop, which has suffered from dry weather this season like its neighbors Argentina and Paraguay, was forecast at 67.9 million tonnes, down from 69.8 million tonnes in early March, Celeres said in its ninth forecast of the season. Brazil produced a record 74.9 million tonnes last year under abundant rains.
Insufficient rain over the Southern Cone, which accounts for more than half of the world's soybean exports, has supported soybean futures prices since December and stoked concerns about higher food prices.
"Estimates will funnel down from here out toward a final number now that harvesting is essentially over in three of four of the top producer states," grains analyst at Celeres Leonardo Sologuren said referring to how he expected month-to-month adjustments to estimates to grow smaller.
Celeres's numbers are roughly in line with recent market and government forecasts for the crop, which have been falling since late in 2011 when rain failed to appear in the planting season over Brazil's main southern soybean states.
The U.S. Agriculture Department's current forecast for 68.5 million tonnes may be reduced when it issues its monthly update on April 10, industry sources said.
Only Rio Grande do Sul has a large part of its fields yet to be harvested, with 32 percent of its crop collected. The state has been the worst hit by this year's drought. Sologuren said output is expected to drop 32 percent in the southernmost state, by current estimates.
"We could see a little more taken off Rio Grande do Sul from last year's numbers. Parana was pretty badly hit too but it's much more advanced in harvesting with about 90 percent brought in, so we don't expect a big drop there," he said.
Brazil's biggest soy state Mato Grosso is done harvesting and its production is up 6 percent from a year ago at a record 21.7 million tonnes, according to Celeres. But the analyst's April estimate fell 500,000 tonnes from its March estimate, the largest drop of all the states month to month.
Rio Grande do Sul numbers fell 415,000 tonnes in April from March to 7.7 million tonnes. The state put out a record 11.2 million tonnes last year. (Reporting by Reese Ewing; Roberto Samora; Writing by Peter Murphy; Editing by Dale Hudson and Bob Burgdorfer)