November 17, 2008

Mexico's grains trade quiet as peso volatility continues


Physical trading continued at a slow pace this week in Mexico's cash grain markets as the peso remained volatile and had traders struggling with fixing purchasing prices, traders and importers said Friday (November 14).


Although off the "most extremes of volatility" seen a few weeks ago, one trader said, margins for purchasing prices remained wide as the Mexican peso traded within a range from MXN12.77 to MXN13.30 this week.


"Prices continue to be very volatile, it's going up and down all the time and it doesn't stay long enough in the same range for us to try to fix any serious new contracts," said one Mexican physicals trader for a grains importer.


Traders said that as yellow corn prices had risen in the local market because of the more expensive peso needed for dollar-based imports, locally produced sorghum from the new Bajio crop was finding a competitive market demand.


"Even though the futures prices for yellow corn came down this week, our base prices didn't because of the weakening of the peso," said another grains trader by telephone from northern Mexico.


But overall purchasing prices for yellow corn did see margins narrowing at lower levels than at the end of last month when prices were up to 600 pesos apart per tonne.


The Mexican grain market reported this week that the first loads of new grain crops had started reaching the market from the Bajio spring-summer crop, for which harvesting started in the second half of October.


Corn and wheat futures ended stronger Friday at the Chicago Board of Trade. December corn was up 3 1/4 cents at US$3.80 1/4 a bushel and December wheat settled 16 cents higher at US$5.54 1/4 a bushel.


Soy futures, meanwhile, also ended the week stronger. Active January soy was up 2 cents at US$8.96 a bushel, and December soymeal was US$1.50 higher at US$265.50 a short tonne.


US$1= MXN13.078 (As of November 16, 2008)

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