October 20, 2006

 

Argentina's wheat down sharply as exporters step out

 

 

Argentine spot and wheat futures prices tumbled over the past week as exporters stepped out of the market to drive down domestic prices, analysts said.

 

Cash wheat was quoted at ARS360 (US$116.50), down from ARS380 a week ago. December wheat futures fell to US$124 from US$128 a week ago.

 

"Exporters are buying very little wheat on the open market," Cortina Beruatto analyst Jose Frogone said.

 

Domestic trade in wheat has been all but frozen this week on rumours that the government was poised to step in to limit exports in an attempt to rein in domestic wheat prices and inflation.

 

On Friday, representatives of the leading wheat exporters met with Agricultural Secretariat Miguel Campos. Since that meeting, exporters have been absent from the market, according to traders.

 

"Maybe exporters have been making some purchases outside of the open market," Frogone said.

 

"There is very little transparency in the wheat market right now," he added.

 

Argentine wheat exporters have already declared export commitments of 7.8 million metric tonnes of new-crop wheat. Only 7.25-8 million tonnes are expected to be available for export from the 2006/07 crop, according to analysts.

 

Last week, the government changed the requirement for export commitment declarations, requiring exporters to show an actual contract when making a declaration.

 

Exporters were making declarations in order to reserve export rights without actually having export contracts, according to analysts.

 

Argentina is expected to produce 13.25 million metric tonnes of wheat in 2006/07, according to the US Department of Agriculture. Domestic consumption estimated at 6 million tonnes.

 

In May, the government pressured wheat exporters to voluntarily limit exports in an attempt to rein in climbing flour prices and domestic inflation.

 

 

Corn

 

Local cash corn prices rose over the past week in line with Chicago, Frogone said.

 

Cash corn sold for ARS330 per tonne Thursday in Rosario, up from ARS320 a week ago. April 2007 futures slipped to US$97 per tonne compared with US$98 a week ago.

 

Argentina will plant an estimated 3.3 million hectares of corn during the 2006/07 crop cycle, up 3 percent from 3.18 million in 2005/06, according to the Agriculture Secretariat.

 

The USDA estimates that Argentina will produce 17.5 million tonnes of corn during 2006/07.

 

 

Soy

 

Domestic soy prices also rose on similar moves in Chicago, Frogone said.

 

Cash soybeans sold for ARS560 per tonne Thursday, up from ARS550 a week ago. May 2007 soybeans closed at US$178 per tonne, up from US$175 a week ago.

 

The Agriculture Secretariat estimates that 15.5 million to 15.8 million hectares will be planted with soy during the 2006/07 crop cycle.

 

The USDA has estimates Argentina's 2006/07 soybean crop at a record 41.3 million tonnes compared with 40.5 million tonnes the previous year.