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Argentina exchange cuts wheat outlook again, rains spell hope for soy

By Maximilian Heath

BUENOS AIRES, Nov 10 (Reuters) - Argentina's major Buenos Aires grains exchange slashed its wheat harvest forecast on Thursday amid a lengthy drought and frosts that have hit crops, but a forecast of rainfall ahead for key farming regions spelled more positive news for soy.

The exchange cut its 2022/23 wheat production outlook to 12.4 million tonnes from 14 million tonnes previously, hot on the heels of a similar cut by the rival Rosario exchange, which forecasts the weakest crop in seven years.

The cuts are bad news for global wheat supply, already dented by poor weather in the United States and Russia's invasion of Ukraine, all major producers. It will also knock billions of dollars from Argentina's key grains export sector.

The estimated wheat crop would mark a sharp drop from 23 million tonnes produced last season. It's also down significantly from over 20 million tonnes the Buenos Aires grains exchange forecast at the start of the season.

"After we evaluated the damages caused by frosts in October/early November covering the southern part of the agricultural area, we've reduced our wheat production projection to 12.4 million tonnes," the exchange said in its weekly report.

The weak harvest is straining Argentina's ability to meet domestic demand as well as agreed exports. The government last week gave exporters license to push back some wheat shipments by 360 days, confirming a Reuters report.

In one bright spot, the Buenos Aires exchange projected that most of the country's key farming areas will likely see "moderate to very abundant" rainfall of between 0.4 inches to 3 inches (10 mm to 75 mm) over the next seven days.

Even if the rainfall is too late for wheat, humid soils will benefit upcoming planting of soybeans, Argentina's main cash crop, which have been stalled by dry weather. The country is the world's top exporter of processed soymeal and soy oil. (Reporting by Maximilian Health; Writing by David Alire Garcia; Editing by Cynthia Osterman)

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