Dryness in southern Brazil has been worse than in three seasons ago, when La Nina also caused severe crop concerns in South America, but has not - yet – reached that level in Argentina.

Comparison of rainfall patterns in the last three months of last year with that in 2008 - when dryness caused crop losses in, particularly, Argentina - shows that southern Brazilian states were drier this time round.

"Growing conditions in south Brazil are drier than 2008-09, the analogue year for a moderately strong La Nina," crop consultant Gail Martell said.

"Both Rio Grande do Sul and western Parana appear drier than three years ago."

'Not as extreme'

However, in Argentina's grain belt, "growing conditions this season were relatively wetter than 2008 in the same period", Ms Martell, at Martell Crop Projections, said.

"The moderately strong La Nina is causing dry conditions in Argentina corn growing areas and similar to the 2008-09 growing season, though drought is not as extreme as before."

At Soybean and Corn Advisor, Michael Cordonnier said that the situation in Argentina is "generally across country not as bad as it was in 2008-09", when dryness cost the country one-third of its corn crop and soybean crops.

'Repeat of 2008-09 is possible'

However, that did not mean that weather concerns, which have lifted grain prices worldwide, could be ignored, with 2008-09-style dryness on the cards "with about two more weeks of adverse weather", Dr Cordonnier said.

"If the month of January ends up being as dry as December has been, then a repeat of 2008-09 is possible."

Ms Martell added that crops in the key Argentina state of Buenos Aries continue "to be stressed by an extremely dry atmosphere", with corn "coming under serious moisture stress early in January as the key pollination period advances".

Acreage losses 

The comments came followed Dr Cordonnier's downgrade on Tuesday of his estimate for Argentine corn production by 2m tonnes, reflecting expectations that some 10% of area earmarked for the grain would go unseeded.

The dryness has so far left some 20% of corn, or about 750,000 hectares, and 19% of soybeans unsown with some two weeks left of the Argentine planting window.

For soybeans, there was a "distinct possibility" that some 5% of sowings, about 1.0m hectares, could go unfulfilled, enough for a net drop in area even if some corn area is redesignated to the oilseed, which can be later seeded.

"It is unlikely that any more than 300,000 hectares of corn could be switched to soybeans."

On Wednesday, US broker RJ O'Brien said that dry weather had cut Argentina's soybean harvest potential by 5m-7m tonnes, and its potential corn crop by 5m-7m tonnes.

'It is serious'

The comparison with 2008-09 has been a key factor both for investors trying to get a grip of potential prices, and farmers grappling with decisions on late sowings.

"Argentine farmers do not want to incur the costs of planting if they don't see themselves getting their cash back," a UK source, with Argentina farming interests, told Agrimoney.com, adding that the penalty posed by the country's export taxes represented an extra disincentive.

"The drought threat is having an impact. Some 4.7m hectares of the projected 18.8m hectares has have not been planted - so we could see a rerun of 2008-09. It is serious as we stand today."