Analysts chopped their estimates for Argentina's upcoming soya and corn crops on Thursday as dryness in the usually fertile Pampas grains belt was compounded by a heat wave that started at the beginning of February, denting expected yields.
Growers in key farming areas say they need substantial showers after a three-month dry spell that has put upward pressure on international soya and corn futures prices. But with only light rainfall expected later in the month, the US government and the Buenos Aires Grains Exchange cut harvest estimates for Argentina, the world's top exporter of soyameal livestock feed and its No. 3 supplier of both corn and raw soyabeans.
"The hope at this point is that the weather forecasts are wrong," said agro-business consultant Manuel Alvarado Ledesma, based in capital city Buenos Aires, where the temperature was more than 36 degrees Celsius (96 degrees Fahrenheit). Cooler weather and light rains of up to 30 millimeters (1.18 inches) were forecast for the Pampas over the days ahead. But key farm areas like Buenos Aires and southern Cordoba provinces were seen staying dry, said Isaac Hankes, a weather research analyst at Thomson Reuters' Lanworth commodities and weather forecaster.
"Entering February, soil moisture levels that were once in good shape across Argentina had dropped to lower than normal levels, creating vulnerability for early planted corn and soya," Hankes said. "Heat and dryness since the beginning of February has coupled with unfavorable soil moisture to negatively impact at least the early planted corn and soyabean plants," he added.
Francisco Abello, who manages farmland in Alberti and Chivilcoy in the north-central part of Buenos Aires province, said the farm belt had benefited from good soil moisture in the early planting stages of the current season. He said the consequences of the drought would be much worse had the 2017-18 crop year not gotten off to such a wet start.
"This last three months of rainfall, November through January, is similar to the 2008-09 season, during which we had the worst drought of the last 100 years. The big difference is that this season we started planting early-season crops with plenty of soil moisture," Abello said.
The US Department of Agriculture (USDA) cut its 2017-18 corn crop estimate to 39 million tonnes from a previous forecast of 42 million. It expects 54 million soyabeans to be produced by Argentina, down from a previous 56 million-tonne estimate. The Buenos Aires Grains Exchange cut its soya crop estimate to 50 million tonnes from 51 million. It decreased its corn harvest forecast to 39 million tonnes from 41 million.