Last Updated : 28 July 2010 at 15:55 IST

Dry weather takes a toll on Argentine wheat too

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BUENOS AIRES (Commodity Online) : After the setback of historical low wheat planting, Argentina’s wheat harvest this season is likely to face potential setbacks on extreme heat conditions in major growing areas.

Analysts said dry conditions in some areas of the country, especially in the south and west of the wheat region, might prevent planting intentions from being fully realised.

Dry weather has already cut hopes for crops in the European Union, Western Australia and, in particular, Kazakhstan and Russia, sending wheat prices jumping on international markets.

According to US Commodities, a new concern is bubbling up in Argentina. It is dry, noting that 79% of the South American country's intended wheat acreage had been planted as of last week. Typically, farmers have all but finished sowings by now.

Rabobank warned of a great deal of uncertainty regarding Argentina's wheat crop, South America's biggest, and one typically drawn on by regional importers such as Brazil.

Fears are brewing for the coming of a so-called La Nina weather pattern, associated with cooler-than-normal Pacific water temperatures, and typically associated with dry weather in Argentina.

Drought was a big factor in a slump of more than 30% in Argentina's wheat area last year, with farmers also blaming government export curbs, which have been partly relaxed this year.

However, rain in many parts of Argentina's wheat belt has raised hopes among some analysts that the country can avoid significant La Nina damage this year, with the government blaming sowing delays largely on "constant rains" in the province of Buenos Aires.

The Argentine warnings came as analysts revealed further rises in prices of Russian wheat last week, with the grain, free-on-board, attracting $210 a tonne, compared with $198 a tonne a week before.

Russia and Kazakhstan, and potentially eastern Ukraine, are set for further hot and dry weather, with some areas forecast to receive temperatures of up to 42 degrees Celsius.