UPDATE 2-Argentina sees soy area, corn yields hurt by drought

jueves 19 de enero de 2012 18:30 ART

* Soy area estimate cut to 18.8 mln hectares from 19 mln

* Government sees corn yields getting slammed by drought

* Buenos Aires Grains Exchange reduces corn area estimate (Rewrites, adds context, details)

By Hugh Bronstein

BUENOS AIRES, Jan 19 (Reuters) - An unforgiving Southern Hemisphere summer sun, intensified by dryness caused by the La Nina phenomenon, is taking a toll on Argentine corn and soy crop expectations, the government said on Thursday.

The drought has caused concern about world food supplies. Argentina is the No. 2 global corn exporter and the No. 3 supplier of soybeans, which serve as the world's most important source of protein.

The weeks-old heat wave will add to the government's fiscal challenges this year as Argentina faces fallout from a sluggish world economy and Europe's financial meltdown. So not only farmers and grains traders but sovereign bondholders as well are watching the vast blue Pampas horizon for signs of rain.

While farmers hope that rains expected over the next week will be strong enough to revive their parched fields, the Agriculture Ministry trimmed its estimate of the area to be planted with 2011/12 soy to 18.8 million hectares from 19 million previously.

"There have been losses in late-planted soy areas, which have received practically no rain since they were sown," the ministry's monthly crop report said.   Continuación...