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BUENOS AIRES: Soybean crops in key parts of Argentina’s farm belt are getting pounded by a yield-shriveling drought, spurring the Rosario grains exchange to slash its 2020/21 crop estimate by 4 million tonnes on Wednesday to 45 million.

Farmers and meteorologists said that hot, dry weather over recent days had taken a toll on crop expectations, warning of additional harvest estimate cuts ahead.

“February and the first 10 days of March did not provide significant rains to a large part of the central farm area. There are serious losses to yields and planted area. It is not yet possible to estimate the floor in terms of production,” the exchange said in its monthly crop report.

Grains powerhouse Argentina is the world’s top exporter of soymeal livestock feed used to fatten hogs and poultry from Europe to Southeast Asia. It is also its No. 3 corn supplier.

Last week the Buenos Aires Grains Exchange warned that it may cut its crop estimates - 46 million tonnes a piece for soy and corn - if significant rains did not appear.

“We are moving towards a homogeneity of unfavorable conditions,” said the Buenos Aires exchange’s top analyst Esteban Copati. “Ground moisture is rapidly being lost, especially in areas where crops are going through critical reproductive stages,” he said. “Early planted soy is losing yields and late-planted soy is losing not only yield but area that can be harvested at all.”

Key corn farming areas are getting hit as well, he added.

The Buenos Aires exchange’s next crop report is expected on Thursday. “It will be difficult for us to sustain our current soybean and corn production projections,” Copati said.

LOW GLOBAL SUPPLIES

The worst hit areas are in Buenos Aires, Santa Fe, Entre Rios, Chaco and Formosa provinces, said Carlos Achetoni, head of the Argentine Agrarian Federation (FAA), a farmers’ group.

“In some specific areas the decline in yields will be considerable. For these growers, it will be a very difficult year,” he added.

A smaller-than-expected Argentine soy crop would add to concerns over low global supplies of the oilseed that have kept soybean prices hovering near seven-year highs.

“The weather story as we see it now certainly points toward the downside overall for crops. There were recent rains, but not enough to turn conditions favorable,” said US-based Isaac Hankes, a weather analyst at Refinitiv, the financial and risk business of Thomson Reuters.

“Looking forward, there are hints of rainfall ahead from some models but we see dryness persisting as the most likely outcome through mid-March,” Hankes added.

Despite the extended dry spell, high international grain prices could nonetheless offer Argentina a robust hard currency harvest at a time when the economy, drubbed by a long recession exacerbated by COVID-19, needs cash.

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