October 20, 2008

Physical trading picked up this week in Mexico's cash grain markets as the Mexican peso strengthened from last week's all-time low and buying prices stayed low, traders and importers said Friday (October 17).

"The market is still very difficult. There is too much volatility and too much uncertainty, but of course the animals have to eat so people are still buying," said a Mexican trader in central Guadalajara state.

Traders said that some buying had been reported in the market for animal feed using yellow corn, soy and soymeal as international prices remained well off the highs recorded earlier in the year.

Buying was aided by the Mexican peso regaining some strength, closing this week at MXN12.70 to the dollar after hitting an all-time low of over MXN14 to the dollar last week, which outpaced gains in purchasing prices for US imported grains.

The Mexican grains market is currently between crops and relies mostly on imported grains until new supply starts flowing by mid-November from the Bajio spring-summer crop for which harvesting starts by the end of this month.

Corn and wheat futures ended stronger Friday at the Chicago Board of Trade, with December corn up 18 ½ cents at US$4.03 a bushel and December wheat settling 11 cents higher at US$5.66 ¼ a bushel.

Soy futures, meanwhile, also ended the week on a higher note, with November soy settling up 27 cents at 8.94 a bushel, and December soymeal closing US$6.20 higher at US$258.20 a short tonne.