March 16, 2007

 

Argentina wheat unchanged on export closure; subsidy doubts

 

 

Argentine wheat prices held steady on the week, with a government closure of the wheat export registry and confusion surrounding the wheat subsidy programme making traders hesitant to step into the market, according to analysts.

 

"Wheat remained unchanged due to little interest in closing new deals, with exporters waiting for the reopening of the wheat export registry and farmers looking for more clarity with the subsidies," the Rosario Grain Exchange said Thursday.

 

Spot wheat closed at ARS345 per tonne in Rosario Thursday, unchanged a week earlier. Just 1,000 tonnes of spot wheat were traded. December wheat closed at US$120 a tonne, also unchanged from a week earlier.

 

Last week, the government suspended the wheat and wheat flour export registry to ensure domestic supply.

 

Exporters had declared export commitments of 8.74 million tonnes as of Feb 28, according to the Secretariat.

 

Wednesday, the registry for wheat flour exports was reopened after the government reached an agreement with the miller federation.

 

The agreement calls for wheat millers to pay farmers a minimum of 370 Argentine pesos (US$119.47) per tonne. However, the agreement failed to boost prices, as millers continued to wait to see a check before upping offers.

 

In January, the government announced that wheat millers would receive a direct subsidy to compensate for wheat bought at any value over ARS370. The subsidies are designed to keep down domestic bread prices.

 

"Broken promises, subsidies which haven't been paid and a flood of regulations to see if one will get back a peso have exhausted even the most organised," said Roagro analyst Javier Cabanellas.

 

This week, the government published the resolution implementing the wheat subsidy programme and is expected to make the first payments shortly.

 

Argentina produced 14 million tonnes of wheat in 2006/07, according to the Agriculture Secretariat.

 

The US Department of Agriculture sees 14.2 million tonnes of wheat from the 2006/07 crop.

 

 

Soy

 

Spot soy fell to ARS595 per tonne at the Rosario Grain Exchange Thursday, down from ARS606 a week ago. Spot volume reached 15,000 tonnes.

 

May soybeans were priced at US$191 per tonne, down from US$196 last week. Just 1,000 tonnes of future contracts where traded.

 

The Agriculture Secretariat forecasts that Argentina will produce 42.5-44.5 million tonnes of soy in 2006/07.

 

The USDA estimates that Argentina will produce 44 million tonnes.

 

 

Corn

 

Cash corn sold for ARS370 per tonne in Rosario Thursday, down from ARS385 a week ago. Spot volume reached 16,000 tonnes.

 

May corn closed at US$120 per tonne, down from US$126 a week earlier.

 

The Agriculture Secretariat sees 2006/07 corn production of 21-22 million tonnes, while the USDA forecasts 21.5 million tonnes.