September 21, 2007
Argentina corn group sees export closure threat to contracts
Buyers of Argentine corn are starting to doubt local exporters' ability to comply with contracts due to a protracted closure of the corn and wheat export registries, the Argentine corn association, Maizar, warned in a release Thursday (September 20).
"Argentina's clients are not just beginning to distrust the rules of the market, but also to worry about compliance with advance contracts made for this time of year when it was expected that the measures would be lifted," Maizar said.
In March, the government closed the wheat export registry to ensure domestic supply after an unusually high level of export commitments had been submitted. The corn export registry was closed in November, but briefly opened in June for an additional 3 million tonnes.
"Never before has the free trade of Argentine grains been blocked for so long," Maizar said.
The export closure is spurring a shift to soy over grains, and Argentine farmers are missing the opportunity provided by high international grain prices, the release said.
Local analysts expect the government to lift the export ban on wheat soon, although there is speculation that the export tax on the grain will be raised first.
Before the registry closure, exporters had declared 13.5 million tonnes of 2006/07 corn for export. Export declarations totalled 7.5 million tonnes at this time a year ago.
Exporters have declared 8.8 million tonnes of 2006-07 wheat for export, compared with 7.9 million metric tonnes at this time last year.
The government has stepped into agricultural markets with a heavy hand repeatedly over the past year to rein in domestic prices on farm goods, implementing export limits and forcing market players into agreements designed to slow price gains in food.
In March 2006, the president blocked all beef exports in the face of soaring domestic prices driven by export demand. The ban was progressively eased and now beef exports are limited to about 70 percent of 2005 levels.