February 4, 2009

Argentina's drought-afflicted soy crop received a favourable amount of rain late Monday (February 2) and early Tuesday (February 3), helping boost expectations that 2008-09 production will be better than previously thought, experts said Tuesday.

 

Santa Fe, a central province that accounts for a quarter of the country's total soy production, received precipitation of up to 120 millimetres in key areas, Tomas Parenti, an agronomist at the Rosario Grain Exchange in Santa Fe, told Dow Jones Newswires.

 

"This is very good for soybeans," he said in a telephone interview. "It is very positive."

 

Between 20 and 100 millimetres of rain fell over a wide area of Santa Fe, with the largest amounts in the Rosario area, he said.

 

This is a change from the scattered showers that have dominated the weather pattern of the past months, with rainfall averaging 10 millimetres.

 

Argentina is suffering its longest dry spell in decades, with many parts of the farm belt so far this year posting the lowest precipitation in 47 years. The reduction has been between 40 percent and 60 percent as compared with historic averages, according to the Buenos Aires Cereals Exchange.

 

The Monday to Tuesday rains will help soy crops that were planted late because of parched soils, meaning there is more margins for crop yields to improve, Parenti said. He said some soy crops may have suffered from hail during the storm, but he isn't certain yet about the impact.

 

In recent weeks, analysts have slashed estimates because of the drought, with parched soils preventing or limiting planted area and the dryness damaging crops or stunting growth.

 

"Before this rain, the estimate was down to 35 million tonnes," said Pablo Cefarelli, a trader at the Roagro grain brokerage in Rosario. "Now we are expecting 42 to 45 million tonnes."

 

The final output still hinges on more rainfall this month, said Parenti.

 

"February is a critical month for crop development," he said.

 

With the drought, the Buenos Aires Cereals Exchange 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.

 

The US Department of Agriculture is expecting Argentina to produce a record 49.5 million metric tonnes of soy this season.

 

There was less rain in the other big soy provinces of Buenos Aires and Cordoba, which account for another 50 percent of total output.

 

There are some fields "that are still suffering from drought conditions" in those provinces, Parenti said.

 

Weather forecasters say they expect a cold front to bring denser and more extensive rainfall over the farm belt this Thursday and Friday.

 

On Monday, Jose Luis Aiello, a climatologist at the Rosario Grain Exchange, said the front could bring rainfall of more than 50 millimetres, which would help improve soy yields.