February 4, 2005

 

 

Argentina's corn, soy prices down from week ago; wheat up

 

Argentina's cash corn and soybean prices ended lower Thursday from a week ago, as farmers get closer to harvesting both crops, traders said. Forecasts for fresh rain also helped to push prices lower.

 

Cash soybeans traded for ARS430 (US$1=ARS2.922) Thursday at the Rosario Cereals Exchange, down from ARS450 a week earlier. Almost all of Argentina's cash soybeans are sold in Rosario.

 

At these prices, farmers are not looking to reduce their stocks. Farmers in the U.S. are also not selling their stocks.

 

The 2004-05 soybean crop is planted in most of the country, according to the Agriculture Secretariat. Farmers will begin harvesting the crop in March. Under favorable climatic conditions, soybean production could total as much as 39 million tons, analysts say. Forecasts for rain have helped pushed prices a bit.

 

Last year local output totaled 32 million, Secretariat data show.

 

About 5,000 tons of cash soybeans were sold Thursday, the exchange estimated.

 

As of Feb. 1, Argentina had sold 6.65 million tons of 2003-04 soybeans and 368,750 tons of 2004-05 soybeans, Agriculture Secretariat data show. By the same time last year, Argentina had sold 8.56 million tons of soy, most of this to China.

 

As of Friday, farmers had planted 98% the 2004-05 soy crop, according to the Secretariat. Planted area is seen at 14.2 million hectares.

 

Corn

 

Cash corn sold for ARS170 per metric ton Thursday in Rosario, down from ARS187 a week earlier.

 

About 3,000 tons of corn where sold Thursday, the exchange said.

 

Corn futures for March delivery sold for about US$59/ton.

 

As of Feb. 1, Argentina had sold an estimated 10.98 million tons of 2003-04 corn, secretariat data show. By this time last year, Argentina had sold 11.3 million tons of 2002-03 corn. Sales of 2004-05 corn totaled 1.58 million tons.

 

Analysts and farm groups have warned that weak corn prices could drive farmers into bankruptcy if prices do not rise and if the government does not lower taxes that total 20% on corn exports.

 

The USDA has put Argentina's 2004-05 corn output at 17 million tons. The Buenos Aires Cereals Exchange has forecast it at 17.5 million tons.

 

As of Friday, farmers had planted 98% the 2004-05 corn crop, according to the Secretariat.

 

Argentina is the world's No. 2 corn exporter, selling about 70% of its production overseas.

 

Wheat

 

Cash wheat sold for ARS242 per ton in Rosario Thursday, up from ARS230 a week ago. Wheat was the only crop showed positive this week.

 

Part of the reason for the gain, said both Baccarin and Frogone, was that the European Union decided to spend less on wheat subsidies than the market had expected.

 

"The E.U. decided to subsidize only four euros (per metric ton), less than what the market had been expecting, and I think this tended to help out," said one analyst. "So maybe the E.U. is not going to be as aggressive as the market had thought. In addition, the wheat harvest is over and export sales are very good. Argentine wheat continues to be sold and it is very competitive."

 

The E.U. would have to provide a subsidy of around US$15 per ton to be competitive with Argentine wheat, according to the Rosario-based brokerage Roagro.

 

Traders estimated that 15,000 tons of wheat were sold Thursday.

 

So far this year, Argentina has sold wheat to at least 18 countries, compared with a minimum of eight by this time a year earlier.

 

The Secretariat has estimated 2004-05 wheat production at over 16 million tons, up from 14.5 million a year earlier.

 

As of Feb. 1, Argentina had sold about 9.82 million tons of 2003-04 wheat, Secretariat data show. Around 4.96 million tons of 2004-05 wheat had been sold by this date.

 

By this time in 2003, Argentina had sold around 6.2 million tons of 2002-03 wheat.

 

The Buenos Aires Exchange puts 2004-05 production at 16.35 million tons and the USDA sees it at 16 million.