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Wednesday, June 20, 2018

Argentine soy beyond return, season 'dead'

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Hope has withered for any recovery in Argentine soy yields hit by a four-month drought that shows no signs of abating, farmers and analysts said on Monday, prompting China to step in to fill the gap in soymeal exports from the world's No. 1 supplier.

The dryness that has blighted the Argentine Pampas since mid-November has forced producers to repeatedly slash their estimates for the 2017-2018 crop. The light rains that are forecast for the days ahead will not be enough to restore fields baked by an unrelenting southern hemisphere summer sun.

"The current season is dead in terms of crop yields," said German Heinzenknecht, weather specialist with the Applied Climatology consultancy. "The showers that are on the way are not going to help soy or corn, but they could improve planting conditions for wheat, which starts being sowed in May."

China's 2017/18 soymeal exports are set to nearly double to around 2 million tonnes, traders said on Monday, lifted by lower Argentine supply. Asian countries led by Japan, South Korea and Vietnam are key importers of soymeal. Argentina is the world's third-biggest exporter of soybeans and corn, as well as the top provider of soy-based livestock feed, used from Europe to Asia to fatten pigs and cattle.

Sparse showers of about 1 centimeter (0.4 inch) are forecast for Wednesday in the usually fertile Pampas grains belt, with 2 to 2.5 centimeters expected on Saturday, Heinzenknecht said. "You can say, cautiously, that the weather will improve but not with the velocity needed to end the drought."

Argentine soybean exports are taxed at 28.5 percent, so the fiscal impact of the drought could be hard as President Mauricio Macri prepares to seek re-election next year while trying to cut the budget deficit and fund infrastructure projects.

-Reuters, Buenos Aires

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