March 5, 2010

Argentina soy prices slump as record crop nears market

Argentine spot soy prices fell over the past week as crop conditions continue to auger a bumper crop this season.

Spot soy traded at ARS830 (US$216) a tonne at the Rosario Grain Exchange Thursday (Mar 4), down from ARS870 (US$226) and ARS880 (US$228) a week earlier.

Soy harvesting is set to kick off later this month and record production is expected.

The approaching supply flood is weighing on prices, with "sellers waiting for a rebound in prices that is becoming less likely due to production prospects," the Rosario exchange said.

Argentina's 2009-10 soy crop continues to develop well, although concerns over excess rainfall persist, the Buenos Aires Cereals Exchange said in its weekly crop report Thursday. The Buenos Aires exchange forecasts record output of 52 million tonnes, but said that the forecast may be raised if the weather cooperates.

"If the weather around harvest time doesn't cause significant delays and if the rate of diseases isn't high, it's likely that final production will be about 2% higher than the current forecast," the exchange said.

Some analysts see Argentina producing more than 55 million tonnes of soy this season, up 72% from last year's drought-battered crop and over 13% higher than the previous record for soy output.

May 2010 soy futures traded at US$215 and US$216 a tonne, up slightly from US$215 a week ago.

Meanwhile, corn futures prices held steady, as solid export demand sustained prices. March-April corn contracts traded at US$115 a metric tonne in Rosario Thursday, unchanged from a week ago. Spot corn was not traded Thursday.

Two weeks ago, the Agriculture Ministry said it will allow 10 million tonnes of corn to be exported this year. Excellent growing conditions have boosted the crop and yields are expected to be high.

However, Argentina tightly regulates corn and wheat exports, allowing shipments only after sufficient supplies are set aside for domestic supply.

Wheat trade remained stalled as farmers wait for buyers to come out with the higher prices agreed with the government.