February 25, 2005

 

 

Argentina's corn, soybean, wheat prices up from week ago

 

Argentina's cash corn, soybean and wheat prices all closed higher Thursday from a week ago, traders said, citing solid demand for grain exports and a drought in Brazil that is likely to hinder soybean production.

 

Cash soybeans traded for 460 Argentine pesos ($1=ARS2.936) per metric ton Thursday at the Rosario Cereals Exchange, up from ARS440 a week earlier. Almost all cash soybeans are sold in Rosario.

 

Traders said an extended drought in center-south Brazil is damaging the crop and will push yields lower, limiting production.

 

"This is what has been pushing prices up," said Diego Chillado, a trader with Granos del Parana. "It directly affects yields and could cut production by 2 to 3 million tons. The (poor) weather is supporting this trend and lifting prices further."

 

Even so, Chillado said the trend may be short-lived.

 

"I think this is a rebound," he said. "Tomorrow prices could be lower."

 

Future 2004-05 soy sold for US$154/ton, up from US$145 a week earlier, the exchange said.

 

Most farmers will start collecting the new crop in March.

 

About 25,000 tons of cash soybeans were sold Thursday, the exchange said. Some 15,000 tons of soy futures were sold.

 

As of Feb 23, Argentina had sold 6.7 million tons of 2003-04 soybeans and 930,750 tons of 2004-05 soybeans, Agriculture Secretariat data show. By the same time last year, Argentina had sold 8.56 million tons of soy, some two-thirds of this to China.

 

As of Friday, farmers had planted 99% the 2004-05 soy crop, according to the Secretariat. Planted area is seen at 14.2 million hectares.

 

Argentina will produce 36 million to 38 million tons of 2004-05 soybeans, according to the Secrtariat. The US Department of Agriculture forecasts Argentine output at 39 million tons.

 

Corn

 

Cash corn sold for ARS180/ton Thursday in Rosario, up from ARS173 a week ago.

 

Between 10,000 and 12,000 tons of corn were sold Thursday, the exchange said. Traders said around 3,000 tons of corn futures were sold.

 

March corn futures sold for US$62/ton, up from $60 a week ago.

 

Farmers have just begun collecting the 2004-05 corn crop.

 

"Corn exports are solid," Chillado said.

 

Argentine corn has been selling for US$16/ton free on board less than similar-quality U.S. corn shipped through the Gulf of Mexico. That discount is getting Argentina more clients, something the USDA confirmed earlier this month when it said Argentine exports could cost the U.S. market share. A USDA official told Dow Jones Newswires that higher exports from Argentina would cost the US about 1 million tons in lost sales.

 

Argentina is selling more corn to South Korea, Saudi Arabia and Peru, but sales still haven't caught up with last year. Each country has bought at least 850,000 tons of 2004-05 corn, Secretariat data show. Malaysia has bought more than 1 million tons.

 

As of Feb 23, Argentina had sold 11.15 million tons of 2003-04 corn, the Secretariat says. By this time last year, exports totaled 11.3 million. Sales of 2004-05 corn were 2.65 million tons by Friday.

 

The Secretariat estimates 2004-05 corn output at 19 million tons. The USDA has put Argentina's output at 17.5 million tons and the Buenos Aires Cereals Exchange has forecast it at 18.6 million. Production could surpass 19 million tons under ideal climatic conditions, according to the exchange.

 

As of Friday, farmers had planted 99% of 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 ARS270 per ton in Rosario Thursday, up from ARS260 a week ago.

 

Traders estimated that between 10,000 and 15,000 tons of wheat were sold Thursday.

 

"Wheat is very firm," said Chillado. "Exports are very stable and very positive and new markets are opening."

 

So far at least 19 countries have bought 2004-05 Argentine wheat, according to the Secretariat. That's up from about eight nations a year ago.

 

Cheaper prices are gaining new clients for Argentina, traders say.

 

The top buyer of local wheat over the past year has been Brazil, importing 1.5 million tons. Egypt has bought one million tons, and Bangladesh has imported 500,000 tons.

 

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

 

As of Feb 23, Argentina had sold about 9.83 million tons of 2003-04 wheat, Secretariat data show. About 6.72 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.