February 24, 2010

Argentina soy farmers holding back on sales

Unhappiness at grain export policies and hopes of forcing prices higher are prompting Argentina's farmers to withhold sales of what is expected to be a record soy crop.

Farmers' advance sales of Argentina's soy crop, which is projected to surge nearly 60% to 51 million tonnes this year, are believed to have declined sharply short of historic levels, according to Hamburg-based Oil World.

The analyst group says farmers have been very reserved sellers of new crop soy so far. The reluctance reflects farmer hopes of getting a better deal from Argentina's government, which imposes a 35% levy on soy shipments.

Unhappiness at export curbs aimed in part at keeping domestic prices in check, led to protests and calls for policy change again last week.

Farmers are also holding off in hopes that they will create tightness on the export markets, which will support prices.

Soy prices fell by ARS13 (US$3.36) to ARS940 (US$240.3) per tonne on Monday (Feb 22) on Argentina's Rosario Grains Exchange, the fourth successive negative close.