December 25, 2008

The drought in Argentina is expected to hurt soy crops amid worries that the dry weather is moving northwards to Brazil.

Argentina's soy crop is estimated to fall between 500,000 tonnes and one million tonnes from the expected harvest of 49.5-50 million tonnes.

Hamburg-based oilseeds analyst Oil World said the drought has taken alarming proportions in some clue areas for soy.

Oil World believes that area planted with soy is less than forecasted, and when combined with the lack of rainfall and discouraging evolution of the crop, Argentina's soy crop harvest will be hurt.

Soy plantation areas in Brazil are concerned that the drought so far concentrated in Argentina, seems to be moving northwards.

The situation in certain areas of Brazil is critical and could worsen if weather conditions remain dry with insufficient humidity during December, said Oil World.

Current forecasts only anticipate rainfall to the north and east of the agriculture area, said Oil World, adding that it preferred to leave Brazil's overall production estimates unchanged for the time being.

Argentina's 2007-08 harvest totalled 47 million tonnes.