Rains this week in Argentina may stanch soy losses after a drought chopped yields by an estimated 20 percent and took as much as 30 percent off the corn crop in the global food supplier, forecasters said on Tuesday.

Storms are expected to sweep the country's Pampas agricultural area on Wednesday. As global grains stocks tighten, Argentine growers as well as government beancounters and sovereign bondholders hope the rain refreshes soy crops baked by what has been an unforgiving Southern Hemisphere summer sun.

The U.S. government releases its monthly estimates for world agricultural supply and demand on Thursday. Most analysts expect the U.S. Department of Agriculture to lower its forecast of 2011/12 global soybean ending stocks due to smaller South American crops.

"There will be irreversible losses to soy planted in marginal growing areas such as western Buenos Aires province, where soils started the season with a moisture deficit," said Tomas Parenti, an agronomist with the Rosario grains exchange.

"Corn in the main grains belt has been hit even harder because plants were trying to flower in December and early January, at the height of the drought," Parenti added. "So even if we get hard rains we are hoping for on Wednesday, they will not help the corn that has already been lost."

Argentina supplies nearly half the world's soymeal, used for animal feed, as well as soyoil, used for cooking and in the booming international biofuels sector. The South American country also provides about 12 percent of soybean exports, an important source of protein for an increasingly hungry planet.

As the world's population grows to an estimated 9 billion by 2050, demand for food and animal feed will nearly double, according to the United Nations. Grains-exporting powerhouse Argentina will be key to meeting those needs.

A lot, however, depends on the weather. Argentina's 2011/12 soy and corn harvests will be reduced by the hot, dry weather that afflicted the Pampas late last year and in early January, a government official said on Monday.

In neighboring Paraguay, the world's No. 4 soy supplier, farmers say output is expected to plunge 45 percent from last year due to the regional drought.

GOVERNMENT FINANCES

The adverse crop weather will add to government fiscal challenges this year as Argentina faces fallout from a sluggish world economy and Europe's debt crisis. Export taxes on soy and related products account for about 5 percent of state revenue.

So bondholders as well as government finance officials have joined Argentina's farmers in hoping for rain.

President Cristina Fernandez, who won re-election in 2011 thanks in part to years of strong growth in Latin America's No. 3 economy, is criticized by farmers for policies such as corn export curbs and a 35-percent tax on soybean shipments.

But tempers have cooled since massive farm protests rocked the Fernandez administration in 2008, as growers benefited from high grains prices fueled by soaring world food demand.

Some private analysts say they expect 2011/12 corn to come in as low as 17 million tonnes, down from 23 million in 2010/11, dashing early-season hopes that Argentina might help replenish global supplies after a lacklustre U.S. harvest.

Soy crop estimates have been knocked down to 47 million tonnes and lower, compared with early-season forecasts of well above 50 million tonnes and the previous year's production of 48.9 million tonnes.

Key farming provinces Buenos Aires, Santa Fe and Cordoba are expected to get a warm air front that will help produce rains when it comes into contact with cooler air from the southern Patagonia region, the National Meteorological Service said.

"This situation could produce storms on Tuesday and Wednesday, some of which could reach a strong intensity," the service said in a statement. (Additional reporting by Maximilian Heath; Editing by Alden Bentley and Dale Hudson)