February 13, 2004

 

 

Argentina's Soybean Prices Fall On Bird Flu Fears

 

Soybean prices in Argentina closed lower on Thursday on concern that recent bird flu problems elsewhere will grow worse, leading to the destruction of more birds, which could dampen demand for the soybean products used to feed them, traders said.

 

Soybeans for immediately delivery sold for 675 pesos ($1=ARS2.93) per metric ton on Thursday in Rosario, Argentina's main soybean port. This compares with 700 pesos per ton a week earlier.

 

On Thursday, officials in the U.S. State of New Jersey said bird flu, or avian influenza, had hit four live poultry markets. In addition, health authorities in Pennsylvania said they had quarantined a poultry flock while they conduct tests to see if it has been infected.

 

This news comes just days after outbreaks in Delaware led officials there to kill 80,000 birds to prevent the infection from spreading elsewhere.

 

While the U.S. bird flu problems are not as serious as are bird flu outbreaks that have wreaked havoc in Asia, traders are concerned that the problem will become worse and crimp demand for soybean products.

 

"The most serious factor in the market now is the bird flu problem," said Federico Mircoli, a trader with the Buenos Aires-based brokerage Granos del Parana. "This has really hit soybean prices. We've even heard rumors that China may decrease its demand for soybeans this year by 18%. We have a negative panorama as far as news goes and this is affecting prices."

 

Meanwhile, forecasts for rainy weather in Argentina also helped to push prices down by allaying concern that dry weather could diminish local soybean output this year, traders said.

 

The U.S. Department of Agriculture estimates Argentina will produce a record 36.5 million tons of soybeans in 2003-04. Of this, Argentina will likely export 11 million tons.

 

Officials at the Agriculture Secretariat have said Argentina probably will harvest between 35 million and 37 million tons of soy in 2003-04.

 

As of Friday, farmers had planted more than 99% of the 2003-04 soybean crop, according to the Agriculture Secretariat. Area is seen at 13.85 million hectares, compared with 12.6 million a year ago.

 

Argentina is the world's No. 3 soy producer, behind Brazil and the U.S. Most of Argentina's soybean production is converted into meal and oil, making it the No. 1 exporter of these products.

 

CORN

 

Corn sold for 255 pesos per ton on Thursday in Rosario, unchanged from a week ago.

 

As of Friday, Argentina's farmers had planted more than 99% of the 2003- 04 corn crop, according to the Secretariat.

 

The Secretariat has estimated 2003-04 corn output at between 12 million and 12.5 million metric tons. The Buenos Aires Cereals Exchange has put production at 12.3 million tons but says this could rise to 12.9 million under good climate conditions.

 

Argentina produced 15 million metric tons of corn in 2002-03, according to the Secretariat.

 

The USDA has forecast 2003-04 corn production at 12.5 million tons.

 

In 2003, Argentina was the No. 3 exporter of corn, behind China and the U.S. However, Argentina is expected to recover the No. 2 spot in 2004 as China consumes more of its own production and ceases to export as much.

 

Argentina will likely export around 11 million tons of 2003-04 corn, according to a report released last month by the Rosario Cereals Exchange.

 

WHEAT

 

Wheat for immediate delivery sold for 335 pesos/ton in the southern port of Bahia Blanca Thursday, down from 350 a week ago.

 

In Rosario, wheat sold for 335 pesos per ton, compared with 350 the previous week.

 

"The lack of any confirmation of new wheat export contracts is keeping pressure on cash prices," the Rosario Cereals Exchange said in its daily commentary on the grains market.

 

Farmers finished collecting all of the 2003-04 wheat crop, according to the Secretariat. Last month, the Secretariat estimated 2003-04 production at 13.2 million metric tons, compared with 12.3 million a year ago.

 

The Buenos Aires Cereals Exchange has estimated total production at least 13.51 million tons, compared with 12.16 million tons, according to exchange data.

 

The USDA has forecast total output at 13.5 million tons.

 

Of this, Argentina will likely export some 7.5 million tons, making it the No. 5 wheat exporter in 2003-04.