February 6, 2009

                                       
Argentina corn, soy prices rise on concerns of lower output
                                   


Corn and soy prices rose this week in Argentina, trailing Chicago Board of Trade futures prices, on expectations that a severe drought will lower crop output in Argentina and Brazil.

 

"Corn and soy closed higher in the face of expectations of a smaller South American crop," the Rosario Grain Exchange said Thursday.

 

While rain fell this week in Argentina, it wasn't thought enough to improve crop yields. More rain is needed to keep estimates from falling further, according to analysts and traders.

 

On Wednesday, the US Department of Agriculture's attache in Argentina lowered its forecast for 2008-09 soy production in the country to 42.5 million tonnes due to smaller harvested area and expected yield declines due to the drought.

 

That compares with the USDA's current official estimate of 49.5 million tonnes and the Buenos Aires Cereals Exchange's prediction of 34.5 million to 38.2 million tonnes.

 

Spot soy was traded at ARS910 (US$261) per tonne at the Rosario Grain Exchange Thursday, up from ARS890 a week ago.

 

May soy were priced at US$240/tonne, up from US$230 a week earlier.

 

Argentina is the world's third-biggest exporter of soy.

 

On the other hand, corn prices rose on concern of declining output and strong demand from exporters.

 

Output in Argentina, the world's third-biggest corn exporter, is expected to be sharply lower this season due to decreased planted area and low yields.

 

Ricardo Baccarin, vice president of Buenos Aires brokerage Panagricola, expects corn production to fall to 15.5 million tonnes, while the Buenos Aires Cereals Exchange suggests output will plunge by 33 percent to 40 percent to 12.3 million to 13.7 million tonnes. The USDA projected a crop of 18 million tonnes.

 

On January 21, the Agriculture Secretariat cut its forecast of planted area to 3.4 million hectares from 3.5 million.

 

It has since said the corn crop is in bad shape due to the drought and hot weather.

 

Spot corn traded at ARS400/tonne at the Rosario exchange Thursday, up from ARS390 a week ago. Traded volume was estimated at 35,000 tonnes. April 2009 corn sold at US$121/tonne, up from US$120.

 

Wheat tracked CBOT prices, trading at ARS390/tonne for delivery in Rosario and ARS370 in San Lorenzo, the Rosario exchange said. Traded volume was estimated at 1,000 tonnes.

 

That compares with a spot price of ARS390/tonne in Rosario the previous week.

 

On January 21, the Agriculture Secretariat cut its forecast for 2008-09 wheat production to 8.3 million tonnes from the 9 million forecast in December.

 

The Buenos Aires Cereals Exchange estimates the 2008-09 wheat crop will fall 46 percent from last season to 8.7 million tonnes, the smallest crop in 20 years, due to decreased planted area and drought damage.

 

With domestic consumption pegged at 7 million tonnes that will leave 1.3 million to 1.7 million tonnes left for export, if current forecasts hold. That will be down sharply from the 10.2 million tonnes of wheat exported from the 2007-08 crop, according to the USDA.
                                                             

Video >

Follow Us

FacebookTwitterLinkedIn