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GRAINS-Argentina drought fuels soymeal rally, lifting soy and corn

* More Argentine dryness threatens soybean, corn crops

* Gains in soymeal lift soybean, corn prices

* Traders expect export demand to shift to United States (Adds start of U.S. trade; changes byline, dateline, previous HAMBURG)

Feb 20 (Reuters) - U.S. soybean meal futures jumped to their highest level since July 2016 on Tuesday as a drought kept the heat on crops in Argentina, the world's top exporter of the livestock feed.

The rally helped lift soybean and corn prices, which touched seven-month and six-month highs, respectively.

Sizzling conditions in Argentina since November have prompted traders and analysts to slash harvest estimates, fuelling projections that export business could shift to the United States from South America.

Argentine farm consultancy Agripac cut its forecast for soybean production by about 18 percent from the start of the season to 47 million tonnes and its corn crop estimate by 12 percent to 37 million tonnes.

There is little relief in sight to the damaging conditions, with dryness set to continue for another week to 10 days, said Dax Wedemeyer, a broker and analyst with Iowa-based U.S. Commodities. Argentina is the world's No. 3 supplier of raw soybeans and corn.

"It's the meal product that is suffering right at the moment," he said.

Chicago Board of Trade May soymeal rose $7 to $383 a ton after hitting $387.90 by noon Central (1800 GMT). The most-active contract reached its highest since July 2016.

March soybeans were up 9-1/4 cents to $10.30-3/4 a bushel after earlier hitting $10.39, the highest for the most-active contract since July 2017.

"A reduced soybean crop in Argentina could in turn cut its soymeal exports and so transfer export demand to the United States," said Matt Ammermann, commodity risk manager at INTL FCStone. "The debate is now about how much Argentinas soybean crop will be cut."

For corn, industry members are expecting a harvest of 33 million tonnes to 34 million tonnes in Argentina, said Tomm Pfitzenmaier, analyst for Summit Commodity Brokerage in Iowa. That would shift about 120 million to 130 million bushels of export demand somewhere else, he said.

"Since the U.S. offers the cheapest corn in the world, it is presumed most of that demand would be shifted to the U.S.," Pfitzenmaier said.

March corn was flat at $3.67-1/2 a bushel, and March wheat dropped 7-1/2 cents to $4.50-1/4 a bushel. (Additional reporting by Michael Hogan in Hamburg and Naveen Thukral in Singapore; Editing by Marguerita Choy)