September 22, 2008


Modest trade for Mexico cash grains amid higher market volatility



Physical trading continued at modest pace this week in the Mexican cash grains markets as import prices were plagued by high volatility in the US grains markets, traders and importers said Friday (September 19).


Focus remained on purchasing of grains to be imported from the US with most activity reported in the market for yellow corn, wheat and soy. Trade in locally produced grains remained quiet.


"We've seen some purchasing in yellow corn, and also some wheat," said one Mexican importer by telephone from northern Chihuahua state. "It's not been too bad, but it hasn't been the most exciting week, either, as far as physical activity is concerned."


Another trader with an importer in central Mexico's Bajio region said there had been some soy buying from a number of feed grains processors that deliver supply to the region's livestock industry.


"Once soy prices came down from last week's high, there was a rush of buying," said the trader. "No major volumes, just a lot of people who wanted smaller contracts for a little extra if prices are to rise again."


Trading in Mexico's national white corn crop remained slow, with supply from the now-completed 2007-08 fall-winter harvest in northern state of Sinaloa tight and most of the crop already sold.


Trade in the white corn market is not expected to start picking up until closer to the harvest in the central Bajio region, Mexico's second-biggest commercial white corn crop after Sinaloa. The Bajio spring-summer harvest starts in late October.


In fundamental news, Mexico's 2008 corn harvest is still on track to reach 25,115,015 tonnes, the Agriculture Ministry said this week.


This is up 6.8 percent compared to Mexican corn production in 2007 where output reached 23,512,752 tonnes of mostly white corn. The latest revision of the Mexican corn crop for the 2008 agricultural year is also a tad higher than the ministry's previous forecast of 25 million tonnes.


Corn and wheat futures settled stronger on Friday at the Chicago Board of Trade, with active December corn closing 15 cents higher at US$5.42 1/4 a bushel and December wheat ending up 25 1/4 cents to US$7.18 a bushel.


Soy products, meanwhile, also closed higher Friday, with active September soy settling up US$27 1/2 cents at US$11.43 1/2 a bushel and December soymeal ending US$1.70 stronger at $315.50 a short tonne.

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