Argentina could harvest fewer than 50 million tonnes of soybeans in the 2017-18 crop year, the lead analyst at the Rosario grains exchange said on Wednesday, as a prolonged drought looks set to continue harming yields.
The dryness in the heart of Argentina's Pampas grains belt is likely to persist through the second half of February, climate experts said.
"This is unlikely to have been the last downward revision. Pessimistic observers are already warning of a crop volume in the low 40 million tonnes range," Commerzbank said in a note.
The most-active soybean futures for March delivery on the Chicago Board of Trade were up 0.1 percent at $10.18-1/2 a bushel by 1158 GMT. They earlier peaked at $10.20-1/2, their highest since July 25.
Commonwealth Bank of Australia analyst Tobin Gorey said in a note that, with the end of February less than a fortnight away, "Argentina's soybean crops need soaking rain within that horizon to arrest a big drop" in yields.
"Weather forecasters are not expecting anything like soaking rain, nor a decline in high temperatures," he said. "We are expecting prices to gain further."
The Argentina drought is also supporting corn prices, with the country the world's third-biggest corn supplier.
CBOT March corn was steady at $3.67-1/4 a bushel, not far below Tuesday's six-month peak of $3.68-1/2.
Analysts have similarly chopped their estimates for Argentina's corn crop, with the Buenos Aires Grains Exchange last week cutting its corn harvest estimate to 39 million tonnes from 41 million tonnes for the 2017-18 season.
Chicago March wheat was nearly unchanged at $4.56 a bushel.