15/12/2010 (Commodity Online), Buenos Aires - World’s leading soybean producer Argentina’s crop prospects are deteriorating at a rapid pace due to continuing dry weather, according to Oil World analysts.

The influential analysis group, which two weeks ago said that the dry start to Argentina's main soybean season was "not yet alarming", warned that a continued lack of rainfall was now taking its toll.

"It is still much too dry in the major Argentine soybean and corn belt." They said.

The group cut its forecast for the crop in the world's third-ranked soybean exporter by 1.5m tonnes to 50.5m tonnes, and warned that further downgrades may be in the offing if rains are not forthcoming.

A crop at the forecast level would represent a drop of 3.9m tonnes year on year, and is lower than the 52.0m-tonne estimate outlined on Friday by the US Department of Agriculture, whose data set global benchmarks.

However, the downgrade comes amid growing fears for the impact that the current La Nina weather pattern, which has a history of bringing dryness to Argentina, may cause.

Argentina's Rosario grains exchange last month broke ranks with other forecasters by estimating a crop of 49.5m tonnes, despite a rise in sowings to a record 18.7m hectares.

And analyst Michael Cordonnier, at Soybean and Corn Advisor, two weeks ago cut his estimate of the Argentine crop by 2m tonnes to 50m tonnes, citing the dearth of rain.

Meteorlogix forecasters on Tuesday predicted dry weather in Argentina for the rest of the week, noting "increasing stress to [crops] across central and eastern portions of the soybean belt".

"Soil moisture is being depleted across southern areas," the meteorological group said.

However, Oil World raised its hopes for the harvest in Brazil, the world's second ranked soybean grower and exporter, where La Nina has been associated with better rains, especially in more northerly areas.

"Rainfall and growing conditions have improved considerably in most of Brazil with the main exception of the southernmost state of Rio Grande do Sul," Oil World said.

The crop now looked on track to hit 67.3m tonnes, 500,000 tonnes more than previously expected, if below last year's 68.7m-tonne crop.