September 11, 2009

Argentine grain market came off last week's closure due to a farm strike with very light trade ahead of an expected deal between the government and grain exports to regulate corn and wheat shipments.

 

Soy was just about the only product traded, with prices easing over the past two weeks at the Rosario Grain Exchange.

 

Spot soy were traded at 950 pesos (US$247) a tonne in Rosario Thursday (September 10), down from ARS1000 two weeks ago.

 

May 2010 soy futures traded at US$210 a tonne, down from US$217 two weeks ago.

 

"Soy trade is quiet, as buyers don't want to pay more and sellers are holding out for better prices," the Rosario exchange said.

 

"Volume is light, although it's unknown how much soy stocks remain in the farmer's hands," the exchange said. The government stopped publishing grain and oilseed stocks data last year amid an ongoing battle with farmers over taxes and intervention in farm markets.

 

Trade was muted again this week ahead of the details of a deal to regulate corn and wheat exports.

 

President Cristina Fernandez is slated to announce the terms for 2009-10 corn and wheat exports later Thursday.

 

The plan is expected to involve an agreement with exporters to ensure domestic supply and free up the surplus for shipment.

 

While the details of the plan weren't immediately clear, the government is expected to fix an amount designated for domestic supply with exporters agreeing to purchase the bulk of the corn and wheat crops and sell the amount set aside back to local grain users, Panagricola vice president Ricardo Baccarin said. In exchange, the government will issue export permits for the surplus.

 

However, with wheat and corn planting plunging this year, much less is expected to be available for export than in past seasons.

 

The Rosario Grain Exchange forecasts 2009-10 corn production of about 16 million tonnes. Half of that amount will likely be set aside by the government for domestic demand, leaving just 8 million tonnes available for export.

 

The Rosario added that 2009-10 wheat production is likely to total about 7.4 million tonnes. With domestic demand estimated at 6 million metric tonnes, just 1.4 million tonnes of wheat are likely to be left over for export from the 2009-10 crop.

 

Neither spot nor future corn was traded Thursday, but March 2010 corn sold for US$109.7 a ton on Tuesday.

 

Wheat futures weren't traded Thursday. Spot wheat hasn't been traded since mid June.

 

"While there is some anticipation of the government's announcements regarding wheat, the year is already lost for wheat due to the fall in planting and the weather," the exchange said.