Brazil-Grain estimates.

BRAZIL-GRAIN CROP ESTIMATE.

Insufficient rainfall in the south of Brazil, mostly in the states of Rio Grande do sul, Parana, Matto Grosso do sul and west Santra Catarina, will cause a 6.5% drop in the 2008-9 harvest of the grain crop.

The harvest will drop from the predicted 144.1 million tons, to 134.7 million tons the government announced on Tuesday.

The report concludes, that soy and corn were the two crops most punished by the lack of rain.

Soybean production this season will reach 57.2 million tons, corn will be 50.3 million tons.

The dry conditions are going to affect the yield of grain per hectare, from 2.8 tons per hectare to around 2.6 tons per hectare.

The high costs of fertilizers this season, coupled with the low yields are going to make it a bad year for farmers.

Just to add fuel to the fire the downturn in the global prices will make matters even worse.