Drought threatens 10 million tonnes of crops in Brazil

Brazil may unexpectedly lose 10 million tonnes of corn and soy this year because of drought, said Agriculture Minister Reinhold Stephanes.

Stephanes said dry weather in northern states of Rio Grande do Sul, Parana and west of Santa Catarina may cut corn production by about 5 million tonnes to about 50 million tonnes, compared to the government's forecast of 54.4 million tonnes last month.

He said soy output may fall to as low as 53 million tonnes, compared to a forecast of 58.8 million tonnes.

He also said prices may be pushed up as the drought in Brazil and Argentina threatens corn and soy exports.

The two commodities have risen more than 2 percent in 2008, after a slump of 11 percent for corn and 19 percent for soy in 2008.

The damaging weather follows a global credit crunch that made it more difficult for Brazilian farmers to finance surging fertiliser costs to ensure yields in the coming harvest.

Analytical firm Informa Economics, based in Memphis-Tenmesee, has also reduced forecast for corn to 49.8 million tonnes from 52.2 million tonnes in December while soy was cut to 59.5 million tonnes from 60.5 million tonnes.