November 3, 2006

 

Argentina's corn, soy prices up on higher CBOT

 

 

Argentine soybean and corn rose over the past week following gains in Chicago, while wheat trade was all but frozen as traders wait to see what form expected government intervention in wheat markets will take, analysts said.

 

"Corn and soybeans are simply following international markets," Negocios de Granos analyst Francisco Belles Aire said.

 

Cash soybeans sold for ARS600 (US$194.65) per tonne Thursday, up from ARS575 a week ago. May 2007 soybeans closed at US$189 per tonne, up from US$182 a week ago.

 

There is strong demand from soybean processors, Belles Aire said.

 

The Agriculture Secretariat forecasts that a record 15.6 million hectares will be planted with soy in 2006/07, up 1.8 percent from a year ago.

 

The USDA estimates that Argentina will produce 41.3 million tonnes of soy from the 2006/07 crop.

 

 

Corn

 

Cash corn sold for ARS390 per tonne Thursday in Rosario, up from ARS350 a week ago. April 2007 futures rose to US$108 per tonne compared with US$101 a week ago.

 

Argentine corn prices are the highest they've been for 10 years, Roagro analyst Javier Cabanellas said in an email market commentary.

 

Strong demand from exporters covering their commitments is also sustaining corn prices, according to analysts.

 

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

 

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

 

 

Wheat

 

No wheat was traded at the Rosario Cereals exchange Thursday.

 

"There were no buyers, nor sellers of wheat today," Belles Aire said.

 

On Wednesday, cash wheat was quoted at ARS355, down from ARS370 a week ago. No wheat futures were traded.

 

Domestic trade in wheat has been all but frozen for two weeks on speculation that the government is poised to intervene in an attempt to reign in domestic wheat prices and inflation.

 

The government has made a series of modifications to the agricultural tax structure in recent weeks in an attempt to control domestic food prices, particularly those for bread.

 

The recent tax changes appear to mark a shift to searching for solutions to keeping down domestic prices without resorting to export limits.

 

However, the uncertainty has caused traders to leave wheat and focus on corn and soy.

 

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