May 19, 2008

 

Argentina strike ups US soy futures; corn wanes

 

 

US soy futures rallied on Friday (May 16) after farm leaders in Argentina said they will continue protests against higher grain export taxes, stalling export movement from one of the world's top soy producers, traders said.

 

An increase in crude oil futures to a record high near US$128 a barrel added support, along with a drop in the US dollar. However, both soy and crude oil backed off their highs by midday.

 

US corn and wheat futures were lower on the Chicago Board of Trade (CBOT), while the rice market was mixed.

 

As of 12:30 p.m. CDT (1730 GMT), CBOT July soy were up 30-1/2 cents at US$13.78 per bushel.

 

July corn was down 7-1/2 cents at US$5.91-1/2 a bushel, with July wheat down 1/2 cent at US$7.71.

 

Soy futures have jumped 2 percent on news that the Argentine strike is expected to continue until May 21. The rally followed a sell-off at the CBOT on Thursday tied to expectations of a resolution.

 

Argentina's farmers are still in the altercation with the government over a new sliding-scale export tax that they say effectively caps prices for their goods.

 

Argentina is the world's top exporter of soymeal and soyoil, and No. 3 in soy exports after the US and Brazil. The strike has prompted buyers such as China to look for alternate exporters such as the US, where soy stocks are forecast to remain tight through the 2008/09 crop year.

 

In a fresh reminder of the impact of the Argentine strike on US soy exports, the USDA on Friday said private exporters sold 253,000 tonnes of US soy to China, for a total of 379,000 tonnes this week.

 

On the other hand, corn futures turned lower, reversing from early strength on optimism about US seeding progress.

 

Don Roose of US Commodities in West Des Moines, Iowa said the central Midwest is going to catch up. The eastern Midwest will get slower, while the far west and north is already moving along.

 

He said Minnesota by the weekend is going to be 80-85 percent done on corn planting while Western Iowa into Nebraska is going to be about the same.

 

However, concerns lingered about the slow planting pace to date, now that farmers are up against the optimal planting time for corn. Corn yields can drop about 1.5 bushels per acre per day, for every day planting is delayed after May 15.

 

Wheat prices were mixed in choppy, see-saw trade. US wheat futures have fallen sharply in recent weeks, pressured by the approaching harvest of a record-large world wheat crop.

 

But the market was seen as oversold and due for a bounce after CBOT July wheat fell to a 5-1/2-month low on Thursday.