August 8, 2008

Argentine wheat rises on higher export demand, prices

Argentine wheat prices rose on the week at the Rosario Grain Exchange Thursday (August 7), led by rising demand and prices in export markets, analysts said.

Exporters paid ARS550 a tonne for spot wheat in Rosario, up from ARS530 last Thursday (August 7). About 45,000 tonnes of spot wheat contracts changed hands Thursday, up from 12,000 a week earlier.

January 2009 wheat sold for $188.00 per tonne, down from $191.50 a week ago. Wheat prices rose as higher prices and demand for the product in international markets "motivated the massive entry of sales orders from farmers," the exchange said.

The increase in sales follows the July 31 authorization of the export of an additional 900,000 tonnes of wheat by ONCCA, Argentina's agricultural trade office. This followed the authorization of 1 million tonnes in June. Wheat exports were blocked last November in an effort to ensure domestic supply and rein in soaring flour prices.

At the same time, it appears the government has suspended immediate plans to change grain export taxes in a move to rebuild relations with farmers. Agriculture Secretary Carlos Cheppi met with leaders of the four main agriculture groups last Tuesday, the first meeting since July 17 - when the Senate voted against the government's increase in export taxes to nearly 50 percent on crop exports. He and other officials said any increase in export taxes would be discussed with farmers first and a consensus sought.

Argentine President Cristina Fernandez de Kirchner had said only three days earlier that she would seek to impose higher taxes on crop exports, fuelling speculation of a new system that would raise the duty on soy to 40 percent from 35 percent and lower it on wheat and corn by five percentage points to 20 percent and 23 percent, respectively.

On the other hand, spot soy traded at ARS840 a ton in Rosario Thursday, down from ARS930 a week ago. Trading volume was scarce.

May 2009 soy traded for $271.50 a tonne, down from $293.20 a week ago. The exchange said prices are still low because of persisting concerns of possible changes in export taxes despite the assurances of Cheppi.

Meanwhile, spot corn prices were down on the week in line with lower prices at the Chicago Board of Trade, yet have been recovering on rising export demand, the exchange said. About 4,000 tonnes of spot wheat contracts changed hands Thursday.

Spot corn traded at ARS400 a tonne in Rosario Thursday, down from ARS450 a week ago.

April 2009 corn sold for $150.50 a tonne, up from $160.60 on August 7.

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