Hot, dry weather in the world's No. 3 exporter of raw soybeans and top supplier of soy meal livestock feed has pushed up prices on the Chicago Board of Trade (CBOT) in recent weeks, with soybean futures hitting a seven-month peak on Tuesday.
"The worst-case scenario on rainfall, or lack thereof, is now expected to be realized for Argentina's corn and soybean crops," said Isaac Hankes, a weather research analyst at Thomson Reuters' Lanworth commodities and weather forecaster.
Hardest hit will be corn, which matures sooner in the season than soy, Hankes said in a telephone interview.
"The March outlook features continuing dryness as the most likely scenario. The only positive is that extreme, consistent heat is absent in both the short-term and extended March forecast," he added.
Later on Wednesday the Rosario grains exchange was expected to release its latest monthly crop report. Last week the lead analyst for the exchange told Reuters that it was likely to chop its forecast of a 52-million-tonne 2017-18 soy crop to 50 million tonnes or lower.
Gustavo Lopez, head of Buenos Aires-based consultancy Agritrend, said in an emailed statement that he expected this season's soy crop to be 47 or 48 million tonnes while he sees the corn harvest at 37.5 to 38 million tonnes.
"The weather forecasts show little likelihood of rain over the short term, which makes the development of crops very difficult," Lopez said.
Pablo Adreani, head of Argentine farm consultancy Agripac said this week he had chopped his 2017-18 soy harvest forecast to 47 million tonnes from an original 57 million. He also cut his corn crop estimate to 37 million tonnes from 42 million tonnes.