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UPDATE 2-Argentine soy crop estimate crashes to 40 mln tonnes -exchange

(Adds forecasts from Buenos Aires Exchange)

BUENOS AIRES, March 15 (Reuters) - Argentina's Rosario Grains Exchange slashed 14 percent off its forecast for the country's soy crop on Thursday, saying drought would limit the crop to 40 million tonnes from last month's estimate of 46.5 million tonnes.

The South American grains powerhouse has suffered hot, dry weather for four months that has shriveled soy and corn yields.

The exchange also cut its corn crop estimate to 32 million tonnes from 35 million. The country is the world's third-biggest exporter of corn and soybeans, as well at its top supplier of soymeal feed, used to fatten cows and pigs from Europe to Asia.

"The impact of the drought on the Argentine economy will go to $4.6 billion, or 0.7 percent of the gross domestic product projected for 2018," the exchange's head of research Emilce Terre said in a message, adding that more crop forecast cuts were possible, especially for corn.

A treasury ministry official told Reuters on Wednesday the drought would cut between 0.5 and 1 percentage point off 2018's headline growth rate.

Dryness has blighted Argentina's normally fertile Pampas grains belt since mid-November, forcing farmers and analysts to repeatedly slash their 2017/18 harvest estimates.

As the Southern Hemisphere summer draws to a close, weather forecasters say they do not expect enough rain over the days ahead to reverse drought-related yield damage in most areas.

"The uninterrupted lack of water that has characterized this summer could spoil a bit more than 1 million hectares of soy," the Rosario exchange said in a statement on its website.

The Buenos Aires Grains Exchange currently projects the soy harvest at 42 million tonnes and the corn crop at 34 million. (Reporting by Hugh Bronstein Editing by Tom Brown and James Dalgleish)