February 5, 2010

Argentine soy prices fell again this week as expectations for record production from South America weighed on international soy markets.

A week of timely rainfall added to the crop's prospects, with the Buenos Aires Cereals Exchange raising its forecast for 2009-10 soy production by one million tonnes this week to 52 million tonnes.

While others are forecasting even larger crops, private analytical firm Informa Economics said on Wednesday (Feb 3) of its expectation for bigger South American soy crops than it did last month. The firm pegged Brazil's soy crop at 66.5 million tonnes, up 500,000 tonnes from its estimate last month. It estimated Argentina's soy crop at 54 million tonnes, up one million tonnes from previous month.

Last month, the USDA estimated Brazil's soy crop at 65 million tonnes, and Argentina's crop at 53 million tonnes which rose sharply from the 32 million tonnes grown in Argentina last season and is well over the previous record of 48.8 million tonnes grown in 2006-07.

Spot soy traded at ARS$920 (US$239) per tonne at the Rosario Grain Exchange on Thursday (Feb 4), down from ARS$950 (US$247) per tonne a week earlier. May 2010 soy futures traded at US$211 a tonne, down from US$215 a week ago.

Meanwhile corn futures lost ground this week due to slack demand from exporters, the Rosario exchange said. March-April corn contracts traded at US$110 and US$112 a tonne, down from US$113 a week ago.

Corn prices have also come under pressure recently as production expectations have risen. Corn area this season was higher than initially expected and the crop is developing well across much of the farm belt.

The Buenos Aires exchange forecasts commercial corn production of 18.4 million tonnes this season. Total corn output last season was just 12.6 million tonnes as a severe drought battered the crop, according to the Agriculture Ministry.