Argentina soy belt drought awakens ghost of 2018 production 'disaster'

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Corn plants affected by a long drought that finally ended this month by the arrival of rain, is pictured in a farm in 25 de Mayo, in the outskirts of Buenos Aires, Argentina January 24, 2022. REUTERS/Agustin Marcarian

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BUENOS AIRES, Feb 10 (Reuters) - Dry weather in recent weeks and scant hopes of significant rains for the rest of the month in Argentina's soy belt are igniting fears of a "productive disaster" akin to that in 2018, the Rosario grains exchange (BCR) said on Thursday.

Argentina, the world's top soybean oil and meal exporter, already saw its 2021/22 campaign bruised by drought and heat waves from December until mid-January, when rains finally arrived. However, the rainfall has dissipated again this month.

"There's new bad news for Argentina concerning the weather. 'La Nina' has gained ground and it's impact will not be diminished, like we thought up to just some days ago," the exchange said in a monthly report.

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"The ghost of the productive disaster of 2018 is surrounding 2021/22 soy," it added, referring to the drought that drove the harvest below 38 million tonnes. The current forecast, already cut sharply in January, is for 40.5 million tonnes.

Farmers and weather forecasters had hoped for stronger rains in the second half of February, though concern is growing they may not materialize, with large swathes of Argentina's normally lush Pampas grasslands already dry.

In the provinces of Santa Fe, Cordoba and Entre Rios "the situation is still very delicate, with soil conditions ranging from scarce (humidity) to drought," the exchange said, adding that northern Buenos Aires province had received adequate rains.

BAD SIGN FOR CORN

It said it was hard to predict the conditions in the third and fourth weeks of February, which have a big impact on early planted soy yields in Argentina. "But what can be seen today definitely isn't encouraging," it added.

The dry spell comes amid a "La Nina" weather pattern, which decreases rain levels in Argentina's central plains. Last month, experts predicted it would fade away, but the grains exchange said it looked to be still active and would remain so.

In its monthly report the BCR held its estimate for the 2021/22 corn harvest at 48 million tonnes, but warned that low yields from some unusually early harvests because of the dry weather were "not a good sign."

Last month the exchange lowered its estimate for corn production by 8 million tonnes due to the December-January drought. Argentina is the world's second-largest corn exporter.

"We need to wait for the corn harvest to be further advanced in order to have a clear picture of results," the exchange said.

The rival Buenos Aires grains exchange said in a weather report that while some farm regions would get decent rainfall over the next week, a large part of the core agricultural zone would have "scarce" rains of less than 10 millimeters (mm).

For the Feb. 17-23 period, the exchange forecast an increase in temperatures, followed by a cold front that will generate moderate rains between 10-25 mm in the main farming regions.

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Reporting by Maximilian Heath; Editing by Adam Jourdan, Tomasz Janowski and Paul Simao

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