Argentine soy, corn weather improving but a dry February could hurt yields

By Hugh Bronstein

BUENOS AIRES, Jan 26 (Reuters) - Rains in Argentina have improved prospects for recently planted soy and corn, but worries about potential crop yields persisted ahead of February, usually one of the driest months of the year, analysts said on Tuesday.

The South American grains powerhouse is the world's top exporter of soymeal livestock feed and the No. 3 supplier of corn.

Within the next week, up to 75 millimeters of rain is expected to hit most of the country's crop producing regions, according to forecasts, with the February-March outlook favoring near-normal rainfall and cooler temperatures.

"I think the worst is behind us. I would say there is more upside than downside from this point onward, albeit not by much," said Dong Soon Choi, an agricultural analyst at Refinitiv.

"But there are still a plenty of risk factors that will play an important role in upcoming weeks. Vegetation densities derived from satellite imagery remain below historical median levels across nearly all major production regions, despite recent improvements," he added.

Wide swaths of Argentina's Pampas grains belt remain in need of water, and if rainfall fails to meet expectations, experts warn that yield potential will suffer.

Uncertainty about Argentine supply has helped push benchmark corn futures on the Chicago Board of Trade to their highest in 7-1/2 years with soybeans at their highest in 6-1/2 years.

Refinitiv forecasts a 45.4 million tonne corn crop this season and a 48.2 million tonne soybean harvest. Argentine corn harvesting starts in April and ends in July with soy harvesting in March through May.

Francisco Santillan, a farmer in Buenos Aires province, said that on average the dryness has caused a reduction of 10% to 15% in potential corn and soy production nationwide. "It could get worse if February is dryer than expected," he said.

Leonardo De Benedictis, forecaster with Argentine agricultural TV station Canal Rural, also stressed the risks that Argentine crops will face in February.

"The areas most affected by dryness so far are Cordoba, central Santa Fe and Entre Rios provinces," he said, while the bread-basket province of Buenos Aires was in slightly better shape.

(Reporting by Hugh Bronstein, additional reporting by Karl Plume in Chicago)

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