June 27, 2008

 

Argentina grain trade resumes as strike lifts, prices higher on-week

 
 

Argentina's grain trade returned to a precarious normalcy this week, as farmers suspended their strike and Congress took up debate on a controversial export tax on grains.

 

Prices at the Rosario Grain Exchange were generally up Thursday (June 26, 2008) from Monday, in line with moves at the CBOT.

 

Pedro Amuchastegui, an analyst at brokerage Roagro, said the strength in CBOT driven by forecasts for more rainfall for the weekend in the US and rising oil prices, helped move the local market.

 

Farmers lifted their strike on Monday (June 23, 2008) and shifted efforts to lobbying Congress to vote against the tax.

 

Farmers have sporadically blocked traffic in a strike since March, causing food shortages in the cities and cutting off grain exports.

 

In March, the Argentine government introduced the controversial grain export duty scheme, which fixed price brackets with each higher bracket carrying a higher tax. The plan sharply raised the export tax on soy.

 

Spot soy traded at ARS900 per tonne at the Rosario Grain Exchange Thursday, up from ARS870 on Monday.

 

Volume was high, with many sellers waiting for prices to touch ARS900 before putting in sell orders, Rosario Grain Exchange analyst Lorena D' Angelo said.

 

Some 80,000 tonnes were traded Thursday after prices hit the ARS900 level, Amuchastegui said.

 

However, prices at local markets are still lower than a theoretical FOB price minus export taxes, as buyers continue to subtract a substantial risk premium due to the threat of further export disruptions if the farm strike resumes, D' Angelo noted.

 

Meanwhile, spot corn traded for ARS530 per tonne Thursday, unchanged from Monday.

 

Exporters paid ARS600 for spot wheat, while local millers paid ARS680 for wheat with a minimum gluten count of 26.

 

US$1 = ARS3.028 as of June 27, 2008

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