July 23, 2012

 

As drought in the US continued to scorch crops and stoke worries over global supply, Argentina soy prices set a new high mark Thursday (July 19).

 

Spot soy surged to ARS1,820 (US$400) per tonne at the Rosario Grain Exchange on Thursday (July 19), up from ARS1,690 (US$370) a week earlier. May soy sold for US$325 per tonne, up from US$320 a week ago.

 

Argentina is the world's No. three soy exporter behind Brazil and the US, and the leader in global exports of soymeal and soyoil.

 

"A new advance in soy contracts in Chicago [drove] local prices to a new level, setting a record unimaginable just a few weeks ago," the Rosario exchange said.

 

At the benchmark Chicago Board of Trade, soy and nearby corn futures soared to fresh record highs Thursday (July 19) as traders continued to worry that the drought in the US Midwest could dent the harvest. Forecasts in the US for spotty rainfall and hot weather again next week are stoking those worries.

 

In Argentina, April 2013 corn sold for US$195 per tonne Thursday (July 19), up from US$182 a week ago. Spot corn was traded at ARS700 (US$153) per tonne. Argentina is the world's no. two corn exporter after the US.

 

Higher prices overseas combined with strong demand from exporters following the government's announcement this week that it would clear 15 million tonnes of corn exports from the 2012-13 crop.

 

Earlier Thursday (July 19) Argentina's agriculture ministry revised its forecasts for 2011-12 corn and soy production in its monthly report, lowering the soy estimate but raising corn.

 

The ministry raised its corn estimate to 21 million tonnes from 20.1 million tonnes last month. About 89% of the harvest is done. With the soy harvest virtually wrapped up, the ministry slightly trimmed its estimate to 40.1 million tonnes, down from 40.3 million forecast last month.

 

Argentina is expecting a record soy crop next season because of El Nino and as farmers shift away from corn due to the high cost of raising that crop. Corn area is likely to fall to 4.2 million hectares next season from five million hectares in 2011-12, according to Agritrend analyst Gustavo Lopez. Higher seed, fertiliser and agrochemical costs for corn will fuel the shift, said Buenos Aires Cereals Exchange crop analyst Esteban Copati.

 

Argentine farmers will plant as much as 20 million hectares (49 million acres) with soy in the 2012-13 season, one million more than during the 2011-12 season, according to analysts.

 

That could lead to production of 55 million tonnes, topping the previous record of 52.7 million set in the 2009-10 season--the last time El Nino showed its face, according to Agripac Consultores analyst Pablo Adreani.

 

Meanwhile, wheat traded for US$180 a tonne, unchanged from a week ago. February new-crop wheat was also unchanged at US$200 per tonne. Argentina is a leading global wheat exporter, with most shipments going to neighbouring Brazil.