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As drought bakes Argentina soy and corn, wheat outlook improves

As drought bakes Argentina soy and corn, wheat outlook improves

BUENOS AIRES (Reuters) - Rains expected from late March in Argentina should enable farmers to start planting the 2018/19 wheat crop in normal conditions, though the moisture will arrive too late to benefit the parched soy and corn crops.

Analysts expect the 2018/19 wheat crop, to be planted starting in May, to surpass the 5.45 million hectares planted in 2017/18.

Eduardo Sierra, a climate advisor for the Buenos Aires grains exchange, said the soil was so dry that even with rains in late March, ground conditions would not start to normalize until April.

“April will be a bit better and in May we will have some re hydration, although variable,” he said.

An improved wheat crop from Argentina would come as wheat prices in Chicago hover around eight-month highs due to forecasts for continued dry weather across the plains of the United States, the world’s largest producer.

Argentina is a top ten wheat exporter and an important supplier for neighboring Brazil. It is the world’s No. 3 soy and corn exporter.

The late March rains will focus on the center and east of Argentina’s grains belt and in the southeast of Buenos Aires province. Argentina’s wheat production is concentrated in the south and southeast of Buenos Aires province.

“If we have a rainy month in April, that will be encouraging,” said Ricardo Baccarin, Vice President of Panagricola consultancy that estimates that wheat area planted could increase 5 percent in 2018/19 to 5.7 million hectares.

The President of Argentina’s Wheat Association David Hughes agreed the area planted would be equal to or slightly above last year’s crop.

The worst drought in decades has reduced expectations for Argentina’s soy crop to about a quarter smaller than last year. Argentina is the world’s top exporter of soymeal and soy oil.

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