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Drought to Persist in Argentine Pampas Through February - Experts

This is supporting the soybean market.

By Maximilian Heath

BUENOS AIRES, Feb 14 (Reuters) - Drought in the heart of Argentina’s Pampas grains belt is likely to persist through the second half of February, further reducing yields of soy and corn in the 2017-18 season, climate experts said on Wednesday.

A three-month dry spell has led the U.S. government and the Buenos Aires Grains Exchange to cut harvest estimates for Argentina, the world’s top exporter of soymeal livestock feed and its No. 3 supplier of both corn and raw soybeans.

The drought has also put upward pressure on international soy and corn futures prices.

“The situation is serious. It would almost take a miracle for the drought not to continue through the rest of February,” German Heinzenknecht, a weather specialist with the Applied Climatology consultancy, told Reuters.

Eduardo Sierra, a climate expert at the grains exchange, also said that heavy rains were unlikely in the region in the coming weeks.

The Buenos Aires Grains Exchange last week lowered its forecasts for soy and corn in the 2017-18 season, to 50 million tonnes and 39 million tonnes, respectively, citing losses caused by the drought.

The U.S. Department of Agriculture also cut its 2017-18 corn crop estimate to 39 million tonnes from 42 million tonnes. It sees Argentina’s soybean harvest at 54 million tonnes, down from a previous 56-million-tonne estimate. {nL2N1PY1B4}

“Statistically, March sees more rainfall. But we will be facing a shortfall after January and February, and as of now, it appears that situation is unlikely to change,” Heinzenknecht said. (Reporting by Maximilian Heath; writing by Dave Sherwood; editing by Ian Simpson)

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