August 7, 2009

Argentine grain trade was muted this week with little change in prices as markets wait for the results of an anticipated accord between the government and exporters.

 

"Soy sellers are waiting for prices to move over ARS1,000 (US$262) to trade, while everyone's waiting for confirmation of the official announcements of the reactivation of grain export markets," the Rosario Grain Exchange said Wednesday (August 5).

 

Spot soy was traded at ARS1000 a tonne at the Rosario exchange Thursday, up from between ARS955 and ARS990 a week ago.

 

May 2010 soy futures traded at US$230 to US$232 a tonne, compared to US$225 and US$232 a week ago.

 

Argentina is working on an agreement with exporters to open up corn and wheat exports while ensuring adequate domestic supply, Cabinet Chief Anibal Fernandez announced Thursday (August 6).

 

The government and grain exporters are expected to ink a deal next week, Fernandez said at a press conference.

 

Wheat and corn exports are tightly regulated to ensure local supply and shield consumers from rising food prices. The government sets aside a predetermined estimation of domestic demand and then only clears the surplus for export.

 

Exports of corn and wheat are likely to fall sharply next season due to a steep drop in area planted with those grains.

 

Spot wheat was last traded in Rosario at ARS654 on June 18. On Thursday, the government's theoretical price that farmers should receive for spot wheat was set at ARS659 per tonne. That theoretical Free-Alongside-Ship price is the free-on-board price minus export taxes.

 

December wheat wasn't traded Thursday.

 

According to the Buenos Aires Cereals Exchange, wheat area is expected to total 2.75 million hectares in 2009-10, down 40.2 percent on the year and representing the smallest area going to wheat in more than 100 years.

 

The Rosario Grain Exchange says that 2009-10 wheat production is likely to total about 7.4 million tonnes. That is down from 8.7 million tonnes in 2008-09, and sharply lower than the average of 14.76 million tonnes over the previous five years.

 

With domestic demand estimated at 6 million tonnes, just 1.4 million tonnes of wheat is likely to be left over for export from the 2009-10 crop, according to the Rosario Exchange.

 

However, exporters have confirmed about 1 million tonnes of old-crop wheat stocks, Fernandez said Thursday. The stocks may allow for a slight loosening of exports.

 

Spot corn was traded at ARS410 a tonne, unchanged from a week ago. Trade has been very light in recent weeks as farmers wait in hope for the higher prices agreed with the government.

 

On Thursday, the government's theoretical price that farmers should receive for spot corn was set at ARS471 per tonne.

 

Meanwhile, corn area is unlikely to be more than 2.3 million hectares, with 2009-10 production at about 16 million tonnes, according to the Rosario exchange.

 

Half of that amount will likely be set aside by the government for domestic demand, leaving just 8 million tonnes available for export, according to the Rosario exchange.

 

However, about 1.5 million tonnes of old crop stocks remain, Fernandez said.

               

US$1 = ARS5.49 (Aug 7)