November 21, 2006

 

Argentina says corn registry closure will not affect exports

 

 

The continued closure of Argentina's new-crop corn export registry is based on a suspicion of market manipulation by exporters, but the closure won't block corn exports, Agriculture Secretariat Cabinet Chief Patricio Lamarca told Dow Jones Newswires Monday (Nov 20).

 

The decision Friday to close the registry sent international corn prices higher on expectations of limited supply.

 

"We haven't in any way suspended exports...and we're not thinking about setting any export quotas on corn or wheat," Lamarca said.

 

On Friday, Argentina closed the export registry for 2006/07 grains, oilseeds and sub-products. While all other registries were reopened Monday, the corn export registry will remain closed indefinitely while the government reviews a recent flood of new-crop corn export declarations.

 

"The amount of declarations over the past two weeks, nearly 3.5 million tonnes, leads one to think that there is some type of manipulation going on," Lamarca said.

 

Corn "export declarations are 15 times higher than normal for this time of year...," he said. "If (exporters) declare almost more than the amount available for export this early in the year, it raises alarms."

 

The closing of the registry set off speculation that Argentina would be stepping in to limit corn exports to ensure domestic supplies and prevent inflation.

 

Rising wheat prices have lead to speculation that similar measures would be taken with wheat exports, but the government denies that any such intervention is planned.

 

Instead, the Agriculture Secretariat is planning on subsidising domestic wheat supplies to control inflation in wheat-based products, Lamarca said.

 

The plan has been submitted to the Economy Ministry for consideration, he said.

 

Secretary of Agriculture Miguel Campos said Friday that a compensation programme for wheat would likely be announced in the days ahead.

 

Confusion over the implications of the closing of the corn export registry is based on a lack of understanding of how the registry works, Lamarca said.

 

Exporters declare exports to reserve export rights and to lock in a free-on-board reference price, which will serve as the base that is used to calculate the 20 percent export tax.

 

The recent flood of new-crop corn export declarations is due to "speculation about the futures market, the level of export rights and about the open registry," Lamarca said.

 

Corn exporters already have declared new-crop export commitments of 10.11 million tonnes. Argentina is expected to produce 17.5 million tonnes of corn from the 2006/07 crop, according to the US Department of Agriculture.

 

Argentina consumes 7 million tonnes of corn a year, mainly for feedlot use, Campos said. That leaves less than 400,000 tonnes of new-crop corn undeclared for export. The new crop comes in March.