Argentina's soy and corn harvests will be smaller this season than in the previous crop year, the Buenos Aires Grains Exchange said on Thursday, underlining concerns that recent dry weather might crimp world food supplies.

A weeks-long drought has raised questions about how much corn will be available for export from the No. 2 global supplier, which the world had been counting on to replenish supplies after a disappointing U.S. harvest.

The South American country is also the No. 3 global exporter of soybeans, an important source of protein.

In its first harvest estimates of the season, the exchange forecast soy production of 46.2 million tonnes versus 49.2 million in 2010/11.

It projected a 2011/12 corn harvest of up to 22 million tonnes, down a touch from the 22.1 million tonnes registered by the exchange in the previous season, but far short of initial expectations for a record campaign.

"Both seasons had extremely dry conditions in December, with the difference that the 2010/11 season saw better rains in January," the exchange said in its weekly crop report.

Opinions still vary widely about crop losses caused by the drought, which started in December and lasted until early this week when soaking rains finally swept through Argentina's vast Pampas grains belt.

An unforgiving Southern Hemisphere summer sun, exacerbated by the dryness related to the La Nina phenomenon, led the Rosario grains exchange to slash its 2011/12 corn production outlook to 21.4 million tonnes this month, down nearly 18 percent from its previous estimate.

But fields have been revived by recent soaking rains as meteorologists forecast a normalization of the weather.

Economic analysts and bondholders are meanwhile gauging how drought-related crop losses might hurt tax revenue this year as the country tries to dodge fallout from Europe's debt crisis and slower demand from key trade partners Brazil and China.

The government puts a 35 percent levy on soybean exports. Farmers detest the tax and grumble about lack of government support for the agriculture sector, but tempers have cooled since 2008 when growers rocked the administration of President Cristina Fernandez with massive protests over her policies.

Fernandez, bolstered by a strong-growing local economy, easily won a second four-year term in October.

(Additional reporting by Maximilian Heath; Editing by Lisa Shumaker)