November 25, 2009

 

Few additional export permits seen for Argentina '09-10 wheat

 

 

Argentina has approved wheat export permits for what appears to be all of the surplus wheat from the 2009-2010 crop, although old-crop stocks remain a wild card as the government holds onto the data.

 

Since mid-2009, the agricultural trade office, or Oncca, has approved export permits for about 2.5 million tonnes of wheat, said Rosario Grain Exchange analyst Lorena D'Angelo.

 

Farmers planted the smallest area in more than 100 years with wheat this season, and production is estimated at just seven million tonnes by the Agriculture Ministry. The government has pegged domestic demand at about six million tonnes, leaving just one million tonnes left over for export.

 

Oncca only approves export permits once domestic supply has been set aside.

 

Although Oncca hasn't published data on wheat stocks since December 2008, based on the export permits issued, it appears likely that there are 1.5 million tonnes of old-crop wheat in storage, D'Angelo said.

 

However, D'Angelo noted that the Agriculture Ministry production forecast is likely to be revised upwards, providing some additional wheat for export.

 

The Buenos Aires exchange pegs wheat production at 7.75 million tonnes, but warns that continued dryness in the southern parts of Buenos Aires province may lead it to trim that forecast.

 

Predicting Argentine grain production and exports remains a complicated task due to the lack of official data.

 

The government began withholding key reports late last year amid a bitter conflict with farmers over grain export taxes and limits on shipments.

 

Exports of corn, wheat and beef are tightly controlled to ensure domestic supply and keep down prices.

 

After several months without approving exports, the government began issuing permits again in September, when it announced an agreement with exporters.

 

As part of the deal, exporters agreed to pay farmers a theoretical Free-Alongside-Ship, or FAS, price determined by the government. That theoretical FAS price is the Free-On-Board price minus export taxes and transport costs.

 

The government agreed to grant export permits for 2009-2010 corn and wheat in exchange for a commitment from exporters to ensure domestic supply. Exporters said they will sell back supplies if the government finds the crops have been oversold.