HOT, dry weather over the past week battered Argentina's already dismal wheat crop, and potential production was reduced by 500,000 metric tons to 10.5 million tons, the Buenos Aires Cereal's Exchange said in its weekly crop report.

That would mark a 32.2 per cent drop from last year's wheat output.

The high temperatures and failure of predicted rain to appear came at a critical time for defining yields in much of the 2008-09 wheat crop, the Exchange said.

Dry weather is forecast to continue through the next days across the Pampas, with a cold front following and a risk of frost. This potential frost and the lack of rainfall may cause total production to fall even further, the Exchange said.

To date, 9.2 per cent of the 2008-09 wheat harvest is complete, with low yields coming in, the Exchange said.

Yields so far have averaged 17 per cent less than at this point last year.

Corn 

So far, farmers have planted 74.3 per cent of the 2.64 million hectares seen going to corn this season, 3 percentage points
 behind the pace at this time last year.

Almost all of the early corn planting is done and the remaining area is mostly that expected to be planted with late corn in December.

Dryness is affecting some of the crops, particularly in the south of Santa Fe province and east of Cordoba.

Argentina's 2008-09 corn area may fall sharply from initial estimates due to concerns over prices and the high cost of growing the grain, the Exchange said.

This week, the US Department of Agriculture lowered its estimate for Argentina's corn output by 1 million tons to 18 million tons.

Soybeans

So far, farmers have planted 40.8 per cent of the forecast 18.2 million hectares seen going to soy this season, 2.7 percentage points behind last year's pace, according to the exchange.

Conditions are dry across much of the farm belt, slowing planting in some areas.

Sunflower Seeds

To date, farmers have planted 77 per cent of the 2.21 million hectares seen going to sunseeds this year, according to the Exchange.

The area going to sunflower seeds is seen down 18 per cent from last season due to falling prices for the crop, the Exchange said.

By Shane Romig, Dow Jones Newswires