April 24, 2009

Argentine grain prices were little changed on the week at the Rosario Grain Exchange Thursday (Apr 23) as local traders waited for turbulence in international prices to settle.

 

"The session was calm due to volatility in overseas prices, which left local prices without a clear direction," the exchange said.

 

However, soy prices continued to enjoy support as the extent of drought damage to the crop became more apparent.

 

Pessimistic private reports showing greater losses and the lack of official data gave legs to soy prices, according to the exchange.

 

On Wednesday (Apr 22), the Buenos Aires Cereals exchange cut its forecast for 2008-09 soy production by 800,000 tonnes to 36.2 million tonnes. Last week, the exchange cut its forecast by 2.4 million tonnes.

 

Meanwhile, the Agriculture Secretariat failed to publish its April crop report with forecasts after revoking the March report due to "errors." That report forecast production of 37 million to 39 million tonnes.

 

A brutal drought this season has seen production prospects plunge despite a record area planted. Total soy production is expected to be the lowest in five years.

 

Pests also have done considerable damage to the crop, weakened by hot, dry weather.

 

Spot soy were traded for between ARS960 and ARS970 a tonne Thursday, unchanged from a week ago.

 

May soy were priced at US$260 a ton, down from US$262 on Wednesday last week.

 

Spot wheat has not been traded in Rosario for over a month, when it sold for ARS460 a tonne. With new exports from the 2008-09 crop closed and prospects for poor production next season, traders have been sitting out the local wheat market.

 

"The lack of a reference price is worrying with planting imminent and an additional fall in planted area is expected," the exchange said.

 

Traders are waiting to see whether pessimistic predictions for next season's crop hold true.

 

Extremely tight farm financing in Argentina will lead to a steep decline in planted area next season, Gustavo Grobocopatel, president of the regional growing giant Grupo Los Grobo, said this week.

 

"For sure, there will be a million hectares less area planted with wheat," Grobocopatel said.

 

That would mark a drop of over 18 percent from the 5.4 million hectares planted during the 2008-09 season.

 

Another poor wheat crop is likely to press the government to sharply cut back wheat export permits next year and cause the largest buyer, Brazil, to again look to North American or Eastern European markets to satisfy its demand.

 

During the 2008-09 season, Argentina's wheat production plunged to 8.3 million tonnes, the lowest output in 27 years, as farmers cut back on planted area and a brutal drought battered the crop.

 

With domestic demand pegged at seven million tonnes a year, Argentina will likely have very little, if any, surplus wheat to contribute to international markets next year.

 

Exporters bought spot corn for ARS380 a tonne, compared with between ARS380 and ARS400 a tonne on Wednesday (Apr 15) last week.

 

June 2009 corn sold at US$106 a tonne.

 

US$1 = ARS3.69359 (Apr 24)