Argentina rains cap crop losses from drought, with outlook positive

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Corn plants are seen in a farm in Lujan, on the outskirts of Buenos Aires, Argentina August 2, 2019. REUTERS/Agustin Marcarian/File Photo

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BUENOS AIRES, Jan 20 (Reuters) - Argentina, a major grains exporter, is set for further abundant rains in the coming days and a likely near-average month of precipitation ahead, weather experts said, which should cap recent crop losses from an extended drought since December.

The long spell of dry weather, brought to end by rains arriving earlier this week, had led the Rosario grains exchange to slash its forecasts for corn and soy harvests. read more

Argentina relies heavily on farm exports for foreign currency. It is currently locked in talks with the International Monetary Fund to revamp more than $40 billion of debts it cannot pay and needs to bolster reserves and reduce its fiscal deficit.

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Weather experts said that the rains should halt losses to soy and corn crops, though some irreversible damage had already been done.

Cristian Russo, head agronomist at the Rosario exchange, said he sees a shift towards favorable weather patterns for the remainder of the 2021/22 campaign.

"There was a change in the dynamic and that change means we won't have to make a similar cut in the near future in Argentina and the situation will probably not get worse," he said, adding though that he did not expect losses to be recovered.

The world's top exporter of processed soy, and second of corn, has been hit by a double whammy of La Nina climate patterns in the last two years, which generally lead to less rainfall in the core farm belt.

The Buenos Aires grains exchange agreed with the weather outlook in a report on Thursday, but said that while rains had helped stem crop deterioration they had not yet fully reversed the water scarcity issue and the impact of the drought.

Soybean sowing for the 2021/22 campaign was 95% complete while corn planting was 88% finished, it added.

"Rains are improving the situation, but large areas still have conditions between fair and dry," it said, adding though that "abundant rainfall will continue to recharge the corn fields on the west, center and south of the farming region."

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Germán Heinzenknecht, meteorologist at the Applied Climatology Consultancy, said the impact of the current La Nina would likely fade over the next month, a key period for the development of soy, with rains only slightly below average.

"I think we can get around 100 millimeters in general, with corridors where the outlook can be more generous. With La Niña in decline, if this dynamic continues, we will be fine, discounting the damage already caused," he said.

Late soybean and corn crops being planted now will need water in the coming weeks but will avoid the impact of the drought that hammered early-planted corn in particular.

"The rains are expected to continue this week. The accumulated rains between the weekend and next week are between 70 and 80 mm in the core agricultural area," said Leonardo De Benedictis, an independent meteorologist.

"Then it may rain a little more at the end of the month."

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Reporting by Maximilian Heath Editing by Kirsten Donovan and Frances Kerry

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