BUENOS AIRES (Dow Jones)--Prospects for Argentina's 2008-09 soybean
production continue to decline as the extent of drought damage becomes more
clear, the Buenos Aires Cereals Exchange said in its weekly crop report
Wednesday.

  The exchange trimmed its forecast for soy production to 32.2 million metric
tons, down 600,000 tons from last week's estimate.

  With 94% of the crop harvested to date, average yields continue to fall and
more than 972,000 hectares, or 5.5% of planted area, have been abandoned so far
due to drought damage, the exchange said.

  Average yields are expected to continue to fall, although the effect on total
production is expected to be limited as most of the crop is in.

  Already, the forecast marks the lowest soy output in four years. Average
yields are down over 30% from last season.

  But some see the losses as even more severe.  The Argentine Rural
Confederation, or CRA, on Tuesday estimated production of just 30.5 million
tons, down sharply from initial expectations of about 50 million tons.

  The drop is due to "bad government policies regarding exports and subsidies
which have distorted the process of price formation and the adverse weather,"
CRA said.

  CRA is one of the four top farm groups locked in a bitter battle with the
government over export taxes and farm policy.

  Wheat


  Argentine wheat planting continues to lag behind due to very low soil
moisture levels and farmers' resistance to plant the crop due to low prices
because of government intervention in wheat markets, according to the exchange.

  Just 130,000 hectares have been planted to date, down from 430,000 hectares
at this date a year ago, "when there also was a moisture shortage, although not
as widespread and severe as at present," the exchange said.

  The exchange expects wheat area to total just 3.7 million hectares, down
18.6% on the year.

  Weather models predict a residual La Nina effect through late fall and early
winter.  That could lead to an early end to showers, higher-than-normal
temperatures and a rapid drying of the soil, further reducing output.

  While dry weather is the main reason for drop, farmers are also facing high
financing costs and the economic strain caused by losses to the 2008-09 soy and
corn crops due to drought.

   Corn


  To date, farmers have harvested 88% of the area planted with commercial-grade
corn.  Production is seen totaling 12.7 million tons, the smallest crop in over
a decade.


  Estimates for Argentina's 2009-10 crop production in millions of hectares
(HA) or millions of metric tons (MT).

                     Wheat    Soy       Corn        Sunseed
   B.A. Cereals Exch 3.7HA     --        --          --


  Estimates for Argentina's 2008-09 crop production in millions of hectares
(HA) or millions of metric tons (MT).

                     Wheat    Soy       Corn        Sunseed
   B.A. Cereals Exch 8.7MT    32.2MT    12.7MT      3MT
   Agriculture Sec't 8.3MT    *         12.5-13.8MT 2.45MT
   USDA              8.4MT    34MT      13.5MT      2.5MT
   CRA               8.8MT    30.5MT    13.4MT      3MT


  *The Secretariat has not published its forecast since February - the March
report was revoked. Unnamed sources at the Secretariat told local daily Clarin
that the current government forecast stands at 33 million tons.


  Argentina's historical production estimates in millions of metric tons,
according to the Agriculture Secretariat:

                     Wheat     Soy      Corn      Sunseed
 2007-08             16        46.2     20.5      4.65
 2006-07             14.6      47.5     21.8      3.5
 2005-06             12.6      40.5     14.5      3.8
 2004-05             16        38.3     20.5      3.7
 2003-04             14.6      31.6     15        3.1
 2002-03             12.3      35       14.7      3.4