March 20, 2009

Argentine grain prices were up on the week Thursday (March 19) due to a weaker dollar relative to the world's major currencies, which drove up prices at the Chicago Board of Trade.

 

"Local prices rose due to the important gains overseas, which were produced by some of the US government's policies that weakened the dollar," the Rosario Grain Exchange said.

 

Continued friction between Argentina's farm groups and the government also gave prices a lift.

 

Argentina's farmers took to the streets again Thursday to protest government farm policy after the House of Representatives failed to vote on a bill to lower the export tax on grains.

 

Opposition legislators weren't able to muster the quorum needed to vote on the bill.

 

Farmers reacted angrily, vowing to protest at roadsides across the country.

 

On Tuesday, farm group leaders met with government officials for the fourth time in as many weeks, but they failed to break a deadlock in negotiations over the export duties.

 

The leaders are set to meet with Production Minister Debora Giorgi and Interior Minister Florencio Randazzo on Tuesday for the fifth weekly meeting aimed at defusing the conflict.

 

Local crushers bought spot soy for ARS850 (US$233) per tonne at the Rosario Grain Exchange Thursday, up from ARS800 a week ago.

 

May soy were priced at US$230 per tonne, up from US$210 a week ago.

 

Exporters bought spot corn for between ARS390 and ARS410 per ton Thursday, compared to ARS410 per tonne a week ago.

 

April 2009 corn sold at US$114 per tonne, unchanged from a week ago.

 

Spot wheat wasn't traded in Rosario Thursday. It was last traded about two weeks ago for ARS460 per tonne.

 

"Exporters aren't making any new sales, and aren't buying locally, while local millers are waiting," the Rosario Exchange said.

 

The wheat traders are waiting to see how a recent government resolution designed to provide farmers with a higher local price plays out.

 

In theory, millers should be paid the theoretical price, known as the Free Alongside Ship, or FAS, price, which is about US$155 a tonne, said Lartirigoyen S.A. analyst Francisco Mariani.

 

However, farmers have only been seeing offers of about US$130 to US$135 a tonne, Mariani said.

 

In a competitive market, farmers should receive a price based on subtracting export taxes and exporters' margin from the FAS export value. However, local millers have consistently taken advantage of export controls to drive down prices. The millers step out of the market when exports are open, biding their time until exports are shut again and they can bid without competing with exporters.