August 28, 2009

Argentine soy prices edged higher on the week at the Rosario Grain Exchange Thursday (August 27), but volume was very low ahead of a week-long farm strike.

 

Spot soy was traded at 1000 (US$259.75) pesos a tonne in Rosario Thursday, up from ARS970 a week ago.

 

May 2010 soy futures traded at US$217 a tonne, up from US$215 a week ago.

 

"Very few sellers did business today faced with the impossibility of filling the contracts" due to the strike starting tomorrow," the exchange said.

 

Argentina's farmers plan to block the sale of all grains and live cattle starting Aug. 28 and ending Sept. 4.

 

Farmers are fuming over President Cristina Fernandez' veto earlier Tuesday of a bill granting export tax relief to those farmers hit hardest by last season's drought.

 

Last week, Congress approved the emergency farm bill, providing at least ARS500 million (US$130 million) in drought relief funds. The bill provided tax benefits and suspended export taxes for farmers from districts declared "disaster zones" and cut the export taxes in half for farmers from "emergency zones."

 

While farmers will still receive the aid funding, the president used her line-item veto powers to strike the tax breaks from the bill.

 

Spot corn wasn't traded Thursday, but March 2010 corn sold for US$105 a tonne.

 

Even before the strike, corn trade was muted as the market waited for an export deal.

 

The government is working on an agreement with exporters to open up corn and wheat exports while ensuring adequate domestic supply, Cabinet Chief Anibal Fernandez said earlier this month.

 

However, little progress appears to have been made so far.

 

Wheat and corn exports are tightly regulated to ensure local supply and shield consumers from rising food prices. The government sets aside a predetermined estimation of domestic demand and then only clears the surplus for export.

 

Exports of corn and wheat are likely to fall sharply next season due to a steep drop in area planted with those grains.

 

Wheat futures weren't traded Thursday. Spot wheat hasn't been traded since mid June.