February 2, 2009

Argentina's 2008-09 soy crop needs rain next week to improve yields and output in the face of the worst drought in decades.

 

"The forecast is for rain in the first days of February," said Javier Grimau, an analyst at the Buenos Aires Cereals Exchange.

 

If the wet weather arrives, this could partially boost production estimates, he told Dow Jones Newswires.

 

"The improvement would be partial given that with the drought the soy crop has lost a lot of leaves and hasn't developed in time or condition," he said.

 

Weather forecasters are suggesting that a change in longer-range weather patterns could bring two storms next week and drop up to 60 millimetres of rainfall over wide areas of the farm belt instead of the average of 10 millimetres from isolated showers in recent months.

 

If these rains don't appear, the current weather pattern of "very isolated" showers may continue in February, Grimau said.

 

"If it doesn't rain next week [the soy crop] will be affected" at a critical stage of development when moisture is needed for growing the beans, he added.

 

Argentina, the world's third-biggest exporter of corn and soy and first for soymeal and soyoil, is suffering its longest dry spell since the 1950-60s.

 

So far this year, many parts of the farm belt have seen the lowest precipitation in 47 years, with a reduction of between 40 percent and 60 percent from historic averages, according to the Buenos Aires Cereals Exchange.

 

This led the exchange last week to cut its 2008-09 soy production estimate to between 34.5 million to 38.2 million tonnes, or 17 percent to 25 percent less than the 2007-08 season's 46.2 million tonnes.

 

By comparison, the US Department of Agriculture is expecting Argentina to produce a record 49.5 million tonnes of soy this season.