October 24, 2011
Argentine 2011/12 soy forward sales up 50%
Although forward sales of Argentine 2011/12 soy crop have just begun, they have already exceeded the sales booked during the same period last year by 50% and cultivators are using the sales to support sowing.
The agriculture ministry said that through October 12, exporters had bought 4.2 million tonnes of the 2011/12 crop, compared with 2.7 million tonnes previously.
Argentina is the world's largest exporter of soymeal and soyoil and its economy has been lifted by the global commodities boom of the last decade.
"There is more willingness to sell and more willingness for forward purchases," said Patricia Bergero of the wheat exchange in Rosario.
"I think buyers are probably trying to guarantee supply because they have seen that there is a lot of demand here and abroad."
The 2011/12 soy year has just started, with production estimates between 52 and 53 million tonnes, according to the government.
Argentina is also a major exporter of corn and wheat, but the government restricts the volume of overseas sales as a way to try to ensure that domestic demand is met. The policy is harshly criticised by the farm sector.
Growers said the difficulties of exporting wheat and corn have forced them to sell soy on the forwards market to raise money for planting. Normally they could finance planting from forward sales of other grains instead of resorting to soy forwards.
"I have seen cases where growers have corn in storage and cannot sell it. They cannot turn it into working capital, so they go and sell soy forwards," said a broker in Rosario.
Soy prices were at lofty highs recently, which encouraged growers to book sales in the forwards market. More recently prices have been volatile, but the broker said high domestic inflation and relatively affordable credit are also encouraging growers to sell soy in the forwards market.