UPDATE 1-INTERVIEW-Alarm at soy overplanting in Argentina
* Too much soy planting, not enough corn, threatens soils
* Fertilizer group sees 2013/14 soy area at 18 mln hectares
* Con area seen at 4.5 mln hectares, wheat at nearly 4 mln
* World grain prices hit by fat crop production expectations
(Adds details about Argentine soymeal, soyoil markets)
BUENOS AIRES, Sept 20 (Reuters) - Argentina is planting too much soy and depleting soils that need crop rotation to keep their nutrients, the head of the country's fertilizer industry chamber told Reuters on Friday, raising an alarm in the world's No. 1 soyoil and soymeal exporter.
The oilseed will dominate Argentina's key farm sector again this season followed by corn and wheat, according to fertilizer sales showing growers intend to plant the country's three main crops in proportions similar to the previous year.
Lower quality soils cause lower crop yields and in turn lower farm profits and government revenue. Locked out of the international capital markets since its 2002 sovereign default, the Argentine government depends on agricultural tax revenue to fund President Cristina Fernandez's expansive social programs.
"Argentina is in a critical situation in terms of lack of crop rotation and soil sustainability," said Maria Fernanda Gonzalez Sanjuan, head of the Fertilizar chamber. The group represents 27 companies that produce, import and sell fertilizers in the South American grains powerhouse.
"Growers are planting too much soy because they want to reduce their risks," she added. "Soybeans are more resistant to bad weather and government policies in Argentina also favor soy over corn or wheat, both of which are subject to export limits."
Farmers complain that the limits, which can be raised and lowered through the year, kill competition among buyers and make crop planning impossible.
Thirty-six percent of Argentina's total 2.8 million tonnes in fertilizer sales this year have been for soybeans, equal to the proportion dedicated to the oilseed in the 2012/13 season, according to Fertilizar.
RISING WORLD DEMAND
Argentina is the leading exporter of soyoil, used in the booming international biofuels sector, and soymeal livestock feed, used as far away as China where an expanding middle class is developed a taste for meal-fed beef, chicken and pork.
The South American country is also the world's No. 3 supplier of soybeans and corn, as well as a big wheat exporter.
The price of all three crops has fallen this year due to hearty global output estimates, making Argentine farmers ever more keen to cut risk by focusing on weather-resistant soy.
Recent dryness in the Pampas farm belt has added to the jitters and deepened the trend away from planting corn, which is much more expensive to cultivate than soybeans.
Fertilizar expects Argentine farmers to plant 18.31 million hectares with soybeans in the upcoming 2013/14 season, down 3 percent from 2012/13. Wheat is already planted for Argentina's 2013/14 season. Corn is going into the ground this month and next with soy to follow in November.
The chamber's projections are based on fertilizer sales and a survey of the seeding intentions of about 1,200 growers.
Corn growers account for 28 percent of Argentine fertilizer sales so far this year, down a touch from 29 percent in the previous season, Fertilizar said. The group expects 4.47 million hectares to be planted with commercial use corn this year, up 2 percent from 2012/13.
Wheat fertilizer account for 20 percent for 20 percent of overall sales this year, just higher than 19 percent in 2012/13.
Fertilizar sees an 8 percent jump in 2013/14 wheat area to 3.95 million hectares.
Demand for wheat has soared in Argentina after the government approved abundant amounts of the grain to be exported based on optimistic 2012/13 production forecasts, leaving little in the country to be milled into bread.
Fernandez, re-elected in 2011 on promises of increasing government's role in the economy, uses export curbs on wheat and corn to ensure ample domestic food supplies. The policy, widely criticized by farmers, backfired this year due to inaccurate early season crop estimates.
The U.S. Department of Agriculture has forecast Argentina crop production at a downwardly-revised 26 million tonnes of corn in the 2013/14 crop year, 12 million tonnes of wheat and 53.5 million tonnes of soy.
Soybean exports are not curbed in Argentina, but they are taxed at 35 percent. The farm sector generally disagrees with Fernandez's policies, which include heavy foreign exchange controls and a passive approach to inflation, clocked by private economists at 25 percent, on of the highest rates in the world.
The threat of soil depletion in a major food supplier such as Argentina meanwhile risks robbing world consumers of crop yield growth. Global food demand is expected to double by 2050, according to the United Nations.
(Editing by Andrew Hay)