Argentina soy, corn follow CBOT Down; wheat trade stalled

Weakness in international commodity markets over the past week pushed down Argentine corn and soy prices, while wheat trade remained stalled as the government seeks to hammer out a deal between farmers, millers and exporters.

Spot soy traded at ARS980 (US$257.22) a tonne in Rosario on Thursday (Jan 21), down from ARS990 (US$260) a tonne the previous week; May 2010 soy futures traded at US$218 and US$220 a tonne, down from US$225 a week ago.

Soy prices at the benchmark CBOT came under pressure this week in part due to expectations of record output from South America this season.

Spot corn traded, but March-April corn futures traded at US$110 a tonne, down from $112 a week ago.

Wheat traded again on Thursday as farmers hold out for higher prices agreed with the government, but millers and exporters balk at paying the higher amount. The government's theoretical Free-Alongside-Ship (FAS) price on Wednesday, the most recent available, was ARS633,00 (US$174) a tonne.

Agriculture Minister Julian Dominguez met with representatives of the farm groups, millers and exporters on Wednesday (Jan 20) and announced an agreement for local millers to buy 1.5 million tonnes of wheat at the full theoretical FAS price and the freeing up of 250,000 tonnes of wheat for export.

However, farmers remained sceptical of having seen similar agreements in the past go unfulfilled. Wheat production is down sharply this year as farmers turned away from the crop due to early drought and continued government intervention in the sector.

Output is estimated at 7.5 million tonnes by the Agriculture Ministry, with about 11 million tonnes of total supply expected to be available this year when stocks held over from last season are included, Dominguez said. The domestic demand around 6.5 million tonnes would leave 4.5 million tonnes for export.

The government tightly restricts wheat and corn shipments, only approving exports once domestic supply is assured.