Argentina Crops Feel The Heat, But Drought Fears Overblown

Argentina's crops are starting to feel the heat as hot, dry weather common in December blankets the farm belt, the Buenos Aires Cereals Exchange said in its weekly crop report. The soy crop is showing signs of stress, but can easily rebound if showers materialize next month. However, many parched corn fields have already suffered irreparable damage that will cut yields, the exchange said. So far, 81% of the soy planting is finished, with 18.85 million hectares expected to be seeded in the 2011-12 season. The exchange said fields are dry in parts of Cordoba, La Pampa, Buenos Aires and Santa Fe provinces, but conditions are good across the rest of the farm belt. According to local analysts, drought fears are somewhat exaggerated, but major showers aren't expected until mid-January because of the La Nina weather phenomenon. Argentina is the world's No. 3 soybean exporter behind Brazil and the U.S., and the leader in global exports of soymeal and soyoil. Soy production for the 2011-12 season is expected to fall between 52 million and 53 million metric tons, the second-largest crop ever, according to the Agriculture Ministry. The exchange said that farmers have seeded 80% of the 3.74 million hectares they are expected to plant with corn. "A large part of the corn planted early in the center of the farm belt are going through their critical phase under unfavoable conditions, showing irreversible reductions in yields," the exchange said. Argentina is the world's No. 2 corn exporter. The 2011-12 crop is expected to reach 30 million tons, according to the ministry, smashing the previous record of 22.5 million tons. The government estimate is higher than those of most private sector forecasters, which only include corn for commercial sale, not corn grown and used as livestock fodder on the same farms. Private sector forecasts put corn production at 25 million to 26 million tons, falling to 22 million to 23 million tons in a worst-case scenario. Meanwhile, farmers have brought 80% of the wheat harvest in from the fields. The exchange expects production to reach 13.6 million tons, although the final tally may come in higher due to high yields in some areas. Argentina is a major global wheat exporter, with most shipments going to neighboring Brazil.